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Welcome to the Patterson Relative Strength Report Weekly Hotline.
Over the past week we have seen a somewhat stagnate market. Most indices are
roughly inline to slightly higher relative to their price levels of a week ago.
With a flat market we have not seen a lot of activity regarding new entries. In
September a total of 30 stocks reached our PRS Entry criteria. In October, 18
stocks reached our entry criteria. We are about half way through November and
we have a total of seven stocks that have reached our entry criteria.
The 30 stocks that reached our entry criteria in September have advanced an
average of 11.3% with five of those positions having been closed. Excluding the
five closed positions, the remaining 25 have advanced an average of 15.1% while
the S&P 500 has advanced 6.1% over the same time period, since August 31.Of the 18 October entries, none of them have reached our exit criteria. The
18 stocks recommended in October have advanced 4.21% on average. That compares
to the S&P 500 which has advanced 3.6% over the same time period, since
September 29.
Stocks that reached our PRS Entry Criteria over the past week:
OCN (Ocwen Financial Corp) IBD EPS rank of 98, strong technical's,
great looking chart. Building a base formation between $14.5 and $16.
TXCO (Exploration Co of Delaware)
IBD EPS is only 27 seems low for an energy company, but their forward earnings
estimates are huge. If the EPS numbers come through, wow! This is an IBD 100
stock with strong upside potential.
ARD (Arena Resources Inc) has an IBD EPS rank of
99. All the energy companies are coming back and ARD is
one of them. However, it has been in a huge range from
$30 to $40. Like a lot of the high PRS energy stocks, if
it doesn't breakout higher over the next two months, it's
PRS_12 will quickly fade.
AVCI (Avici Systems Inc) IBD EPS Rank of 75 tells
us this is a solid company. However, it has a very small
market cap. It trades a lot of volume, but with a small
market cap, it could become volatile, which can be really
good or really bad. AVCI is an internet infrastructure
company. AVCI is the weakest of this week's four. AVCI is
one of those PRS selections that I would rather be a
little late getting into as it is in a solid and
entrenched down trend. Either use a set stop price, or
wait for the stock to recover above the down trend line.
The Table below shows all November entries plus Two from
October worth noting.
The Table below shows the Current Open Active Positions that are either in
an entry configuration (green) or have a PRS_12 less than 80 (Red.) Our exit
threshold is a PRS_12 below 75 so the Red issues are considered under review
and likely to be closed out.
Of the green Open Actives, CVO, MDR, OMNI, ATML, VOL
and CTCI look good for entry now. GEX is very small while EGY and TWTC look
like they need more time.
This week we are
also going to Introduce our First Model Portfolio.
Our First Model Portfolio is based on a $100,000.00
initial Account size. I expect it will take several
several weeks for the portfolio to become fully
invested. This portfolio will be developed in a
manner similar to the recommended method under the
"Getting Started" page on the Website.
- To the Portfolio we will add the following
stocks:
- 500 shares of OCN @ 15.43
- 200 shares of ARD @ 38.83
- 400 shares of CVO @ 19.90
- 600 shares of TXCO @ 13.20
- 500 Shares of AVCI @ 6.88
- That accounts for about $35,000 of a $100,000
portfolio, so we have about 35% exposure t the
market.
As for the Overall Stock market, it continues to work
into what is developing into a near-term high level
consolidation formation. We may see prices pull back a
bit near-term but the overall action remains
constructively bullish. The PRS Time Plane charts
continue to suggest a constructive environment. Provided
the week's economic data does not contain any bombshells,
the interest rate environment remains favorable, which is
a key component of the market's sustained advance.
Have a great week
Jim Patterson
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