Tuesday, September 13, 2011

Active Screen: CANSLIM August 13th

With our updated screen criteria there were a couple of changes in qualifying stocks. Our active stock screen used the following criteria:

Of the stocks in this scan there was only one change from last month: CNOOC (CEO) was dropped and Rio Tinto (RIO) made a return. The remainder of the list was unchanged.

Streaking ahead is Apple (AAPL) with a Market Cap over twice that of second place Vale S.A. (VALE). Despite the 'stepping back' of Steve Jobs, AAPL has continued to defend the thick band of support running between $355 and $362. Current price action shows a tightening of the consolidation. Ideally, this should break higher in line with the direction of the trend leading into the pattern. The presence of $355-362 support (even the 200-day MA) should also help shore demand at rising wedge support. Despite all the positives, AAPL will find it hard to swim against the tide if the broader market takes another dive lower. Cautious optimism.

Zignals Chart Image

Next up is Vale S.A. (VALE). Last month saw a collapse from the relative safety of its 200-day MA to the depths of the July 2010 swing low. Unfortunately, it's struggling to form a firm base, the rising channel has more in common with a 'bear flag' than any bullish pattern. The last line of defense does appear to be the July 2010 low at $24.32. If you are thinking of VALE for the long haul you would be better to wait for it to break above its 200-day MA using a Zignals Stock Alert.

Zignals Chart Image

In third spot is Oracle (ORCL). Last month the decline quickly sliced through the July breakout gap support at $26. But since then it has managed to trade around this level without following through to the bigger band of support down at $21-23. The likelihood is that the scrappy consolidation around $26 will eventually give way to lower prices, but that it may not be the meltdown which led into the consolidation. However, the broader bull trend from March 2009 is over, so whatever emerges is unlikely to see the same level of return which took it from $14 to past $36 in just over 2 years.

Zignals Chart Image

Returning to the list is Rio Tinto (RIO) after a lengthy absence. Like VALE S.A. before it has struggled to recover, after slicing through its 200-day MA in the recent down swing. There was also a convergence of 20-day, 50-day and 200-day MAs which ultimately resulted in bearish crosses between these MAs. There is little to intice buyers at the moment. A strong move past $62.50 would confirm a bottom and keep the prior trend intact, but it's a big ask.

Another miner takes up the next spot, Barrick Gold (ABX). However, unlike its brethren it has managed to buck the trend and push higher, taking it very close to a break of resistance. The Accumulation Swing Index doesn't suggest a $55.50 will break (yet), but should $55.50 clear on heavy volume then it's game on. In the short term, watch for a push back to $51 before the next challenge on $55 is mounted.

Zignals Chart Image

Next on the list is Baidu (BIDU). At the end of last month it was trading alongside channel support, since then it has bumped along a little higher, but hasn't enjoyed the injection of buying volume which would firm demand going forward. However, with the 200-day MA lending additional support and a bullish trend which is still intact there is nothing to stop it pushing higher without the volume. Just be wary of selling accompanied by volume that exceeds recent buying.

Zignals Chart Image

Free McMoran (FCX) had already flashed its troubles back in August. Since then the stock has done little to change the picture. In fact, the stock made a second (failed) challenge on $47 before it darted lower; it currently trades in around $41. A move to the low $30s still looks the favoured outcome.

Zignals Chart Image

Finally, Priceline (PCLN) closes out the top-8. August saw a gap-break of a trend dating back to September 2010. It had looked like the stock was about to enter a consolidation phase with a phase of lower prices. However, the stock has since recovered from those losses - regaining $500 - and rallying back to resistance. The question now is whether the break of the trend is now a powerful 'bear trap' or a new sideways congestion range bound by $450-550 resistance. A break above $550 on volume would give the nod to the 'bear trap'.

Zignals Chart Image


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