On the qui vive

Trouble brews in Summerlin. I have given myself over to too much thinking about too many topics, including where and when my responsibility ends for recommending various investment opportunities -- and your responsibility begins.

I suppose I began stewing on this issue several weeks ago, when I betrayed publicly some private angst. At that time, some of you complained that I crow too often about my successes. Of course, I do not perceive that to be the case; I see it as my responsibility to follow-up on past recommendations, winners and losers all. I accept the responsibility for these recommendations, and owe you periodic updates — when I sell, when I lose interest, etc. I also believe my frequent mentions of past winners and losers are necessary to inform new readers of where I stand; they likely have no notion of past recommendations.

That said, your questions and comments are critical to my effort. They enable me to riff off them, in the attempt to answer your questions. For example,

I am long on LVLT and have been for sometime. I noticed today’s interesting trading activity. It looks to me like an institution dumped ~7-8 million shares late in the day. While this didn’t cause the stock to breach its 50 day it does show me someone is clearly headed for the exits. Would you view this as cause for concern or do you feel since the shares were absorbed by the market and the stock didn’t break the 50 day it’s a nothing to be alarmed about?

Please recall that the NASDAQ 100 index makes changes effective with tomorrow’s opening: eleven stocks, including Level 3/LVLT, drop from the index in favor of eleven additions. So the large block or blocks you saw crossing likely was position squaring ahead of that event. As for the price declining to the 50 day simple moving average (sma), its relevance is dependent upon your time frame, risk tolerance, and objective -- none of which you betray, alas.

And a comment from the blog itself…

When goog went through $420, I gave up on AFL to buy more goog. It's probably a bad sign, but I wonder why I own anything but goog... I'm sure I'll get past it because diversification is a good thing.

Comments of this type concern me. Diversification within reason (say, ~9 stocks) still has a place in the modern portfolio. Does the writer not realize the analogue between his perception of current opportunities and the market in 1999? Then, as well, investors crowded into the ever-fewer stocks that still performed (i.e., rose in price), thus powering them that much higher that much more quickly. The same occurs now for Google/GOOG. More players buy into a rising stock while other leaders crumble; this crowding likely will result in some exciting (read, fast) price appreciation near term. The following comment is from Tommy Dorsey at Dorsey Wright Analytics…

The main trend of GOOG remains positive and the stock has strong relative strength as you would suspect. The chart pattern has consolidated over the last couple of weeks to form a triangle pattern. That triangle pattern has now been completed with a double top breakout at 420. Typically, breakouts from bullish triangle patterns result in quick, explosive moves. With this breakout in GOOG, it provides an entry point for new positions with a stop or hedge point provided at 392, a spread double bottom, or 376, a violation of all near term support. The bullish price objective is, unbelievably, 608. We will see, but certainly the trend chart remains positive here.

I have not previously uttered publicly this number but have held it in reserve for a l o n g time, this $600/share has been my trading objective for Google/GOOG -- possible to achieve by late-April 2006, perhaps sooner. It is also possible it fails to achieve that objective. At this moment, I watch the process itself; i.e., how the chart unfolds. I seek the setup for a key reversal day albeit at a higher price than the current $430.

Of course, it concerns me to state so unequivocally this objective. Many readers latch on to the number they prefer, and then offer recriminations when that level fails to transpire -- $600 is a level to keep my vision focused for a continuing positive move in price; however, I home in on the process itself rather than a specific price objective.

The list that follows is a partial listing of several other companies and stocks I either monitor now as an opportunity setting up, or am already long…

Apple/AAPL: current up trend possibly nears conclusion
Google/GOOG: what can you say?
HoLogic/HOLX: More upside room remains -- which depends, however, on market conditions
Iris International/IRIS: More upside room remains -- which depends, however, on market conditions
LifeCell/LIFC: possible intermediate term base
Matria Health Care/MATR: check basis weekly bars for powerful base
Natus Medical/BABY: short term base?
Nike/NKE: Powerful long-term base in a powerful long-term uptrend. Very bullish.
NuVasive/NUVA: Building intermediate term base; must hold ~$17
Office Depot/ODP: Building intermediate term base
Palomar Medical Technologies/PMTI: Powerful uptrend catches its breath. Temporarily.
Peet’s Coffee/PEET: Less liquidity than I prefer and not a leader, but an intermediate term base nears completion. (Thanks, AP!)
Sirf Technology/SIRF: Intermediate term base possible.
Starbucks/SBUX: So much for its being an “obvious short sale candidate”
Teva Pharmaceuticals/TEVA: TEVA achieved its trading objective on Friday’s opening
Trident/TRID: A possible short term base…
Under Armour/UARM: An exciting, younger company, recently IPO’d.
Whole Foods Markets/WFMI: What can I say? A long-term winner, WFMI is up almost 100% since recommendation in this blog’s first post. Yahoo/YHOO: Thanks again, AP!

If there are stocks not included in the above list that I have mentioned previously, then it is not near a buy point, not trending, or I have lost interest.

Which is a shame, that last item. There are so many good companies, so many great opportunities, that no one can own all of them all the time at the same time. So I focus on what appears to me as the best poised; often wrong, I nonetheless forge ahead.

Of course, there is this post's subject header. Qui vive means "alert, lookout" -- I am on the lookout always for changes. Negative change occurs in the market now, as former bullish patterns creak under the weight of their uptrends; examine CMTL, CUTR, FOXH, KOSP, etc. These declines represent warning shots over the bow, or so goes my interpretation. Thus, I position my portfolio more defensively -- even though I suspect the market could continue to chop higher into the opening minutes of Tuesday, 3 January 2006. And then...?

Questions? Comments? Suggestions?