Wednesday, May 25, 2011

Active Screen - CANSLIM: Top 8 for May 25th

The past month saw a couple more changes to our CANSLIM top-8 as ranked by Market Cap. F5 Networks (FFIV) was dropped (falling to 10th position) and taking its place was Agrium (AGU). The top-8 in order are Apple (AAPL), Vale S.A. (VALE), Barrick Gold (ABX), Baidu (BIDU), Research in Motion (RIMM), Cognizant Technlogy (CTSH), Netflix (NFLX), and Agrium (AGU). The Stock Screener setup was as follows:

Apple (AAPL) has been dogged in its defense of $330 support. What had looked a bearish head-and-shoulder pattern has evolved into a more neutral consolidation. But $330 support is a battleline. Note the fast arriving 200-day MA, currently at $320, to help offer support if needed.

Zignals Chart Image

Vale S.A. (VALE) delivered on its bearish head-and-shoulder pattern. It sliced $31 relatively easily, then struggled in a rally to break above this price.  The past couple of days have produced a "Death Cross" between its 50-day and 200-day MA, a sign a longer term downtrend is now in play. The fundamentals keep it in the screen, but price action is weak.

Zignals Chart Image

Barrick Gold (ABX) collapsed from a high of $55.74 on April 21st to a low of $45.01 on May 13th, cutting through both 50-day and 200-day MAs with relative ease. The May low marked a new reaction low for the year, undercutting the $46 bottom from January. A new lower higher (on this rally) will kick start a new downward trend for the stock. The past week has seen a modest rally, but the stock has it all to do to mount a comeback. First up is the 200-day MA sitting overhead at $49.07.

Zignals Chart Image

Baidu (BIDU) is one of the rally stalwarts in recent months, but it too has its struggles. The stock lost support of its 50-day MA on May 13th and was rebuffed at this moving average following a rally on May 20th. A similar event played out in December 2010 and the stock was able to recover. Two levels of support are key here: $130 in the short term with a second, stronger tier, around $120.

Zignals Chart Image

When the overall market floundered, Research in Motion (RIMM) was already in the mire. The past few weeks haven't changed anything. The stock is down at September 2010 lows ($42.84) and is well away from its 200-day MA at $52.97. Back in February 2011 the stock traded at high of $70.54.

Cognizant Technology (CTSH) is another high flyer for the past year. Early May saw the stock gap below its 50-day MA and then drift lower. It's currently trading just above its 200-day MA at $70.83. The sizable gap breakdown (on volume) will be a point of supply on the next advance, but value buyers may be tempted to take a look here.

Zignals Chart Image

Netflix (NFLX) has the best looking chart of the eight stocks. The stock is currently pressuring $250 resistance. Any existing shorts will be squeezed by buyers on the advancing 50-day MA (at $235.20). It's a relatively straightforward risk:reward play; buyers will take a heavier volume (at least double a 2-month average of volume) close above $250, stop on a loss of $225. 

Zignals Chart Image

Finally, Agrium (AGU) sneaks in at eighth spot. The chart isn't looking too great. The stock lost support of its 200-day MA in early May and hasn't made any serious attempt to regain it. There is an area of support around $78, but beyond that there isn't a whole lot until you get to $50. Not a stock you would want to bet the house on.

Zignals Chart Image


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