04/11/2012: GARY ON NATIONALLY SYNDICATED INVESTORS EDGE RADIO BROADCAST
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https://archives.warpradio.com/btr/InvestorsEdge/041118.mp3
JUST LETTING YOU KNOW
I treat today as somewhat of a “throw away” day. I can’t tell much from a one-day bounce after a little bit of a trashing we’ve had over the past week. What I do now is my list change. Two weeks ago my list was “this size.” And now it is “that size” which means a lot of stocks have gone by the wayside. They’re longer under consideration. More stocks are on the negative side of the equation.
And we stick to the names that have held up best and look the best. These are the name that are still in high ground or are just sitting, while this market has been hit pretty decently.
We also realize that this little hit did not start in the past couple of days. I have talked to you about the commodities for weeks and weeks. Recently the Semis, the Rails, Transports underperforming…leading to this.
I’m getting a lot of emails asking where it’s going from here. My guess is that it’s a correction and that it’s not going to be that big. But that having been said, we’ll let the market decide for itself. We never want to dictate policy to the market.
Remember earnings are coming out in droves now.
An Example of How Something Comes Off My Watchlist
F5 Networks…here’s a good example of a stock. The symbol is FFIV. Now right up front, I have not bought this stock. It gapped up on January on an earnings report to 120, when as high as 140 and it’s down back down to 122. First off, earnings are only up 17%, revenues up 20% — not bad…but nothing big time.
But something happened today and what happens for me – it comes off my watchlist as of today. Why?
Today, it broke the 10-week/50-day moving average on very heavy volume – more than triple.
That’s what does it.
Does that mean the stock cannot recover? It doesn’t mean that.
First off, the company reports earnings in a couple weeks. They could come out with gangbuster numbers and the stock turns back up and goes on its way. But as I have told you, a stock cannot go higher when it drops below its 10-week/50-day moving average. It can trade a little bit higher. It can get really stretched to the downside and rally back up into its major moving averages. But it cannot have a big move when it is trading below its10-week/50-day moving average…and that’s what happened with F5.
Go take a look.
Chart provided courtesy of StockCharts.com
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Gary Kaltbaum owns Kaltbaum Capital Management, LLC (“KCM”), an investment adviser registered with the U.S. Securities and Exchange Commission. The opinions expressed herein are those of Mr. Kaltbaum and may not reflect those of KCM. The information offered in this publication is general information that does not take into account the individual circumstances, financial situation or individual needs of an investor. The information herein has been obtained from sources believed to be reliable, but we cannot assure its accuracy or completeness. Neither the information nor any opinion expressed constitutes a solicitation for the purchase or sale of any security. Any reference to past performance is not to be implied or construed as a guarantee of future results.