The current price is $26.41
The range for the day was $25.78 - $26.49
We put in a limit order for $26.13
Navellier just upgraded the stock to a strong buy

Yahoo has a 1-yr price target of $30.60. If we can purchase it at $26.13 and make it to the Yahoo target price, we would have a simple return of 18%.  That's also the highest point on the chart for this stock.  Which means, we will probably put a stop underneath it, just in case it decides to retreat with our profits.

We also looked at the forward EPS estimates on Yahoo, and entered them on our Stock Study form.  The trajectory trend for 5 years would give us a compounded return of approximately 21%. That would be nice! <G>

Lynn

The current price is $47.94
Yahoo's 1-yr price target is a whopping $55.83
18 analysts have revised EPS upward in the last 30 days
The support line is at $44

We plugged in the Yahoo analysts' estimates for 2009 and 2010 and they are right in line with our 20% growth estimate.  If the 50 dMA can even out and start its accent again, we would definitely consider a limit order at $44.  Maybe we can pick it up on a weak day. 

Lynn

• Support was at $35;
• The support trend was at $38;
• The 50 day moving average was at $40;
• Current price was at $45;
• Yahoo's 1 yr target price was $42;
• MACD turned down at $43.60 and $43.50; negative on this date;
• RSI was 57; previously hit the 70 line at $48;
• Resistance is at $44
• We would have to buy at $38 for a 15.7% total return in 5 years;
• We feel we should put in a limit order at the $35 support line, with a stop stop loss at 7%, or $32.55.  Folks, that's called "margin of safety".

• Support was at $95;
• The support trend was at $105;
• The 50 day moving average was at $117;
• The current price was at $121.42;
• The resistance was at $130;
• RSI was 58; previously hit the 70 line at $126;
• Yahoo 1 yr target price was $146;
• The price was above the 50 and 200 day moving averages;
• If we buy at $105 with a stop loss at $97.65, and it goes to $130, the current resistance line, we would have a 23.8% total return.
• If it were to go to Yahoo's target price of $146, that would equate to a 39% total return (simple).

 Lynn

Back in March, 2008, Dan and I worked on a stock screening process to find better quality for our club's consideration.  We named it the Challenge List.  It has evolved only slightly over the last year.  Mary Ann Davis suggested that we track the stocks that appear on this monthly list to see if our screen is producing stocks that, not only rate high on quality, but also perform well.  Ha!  Fat chance in this market!  I'll be analyzing past lists soon and I'll post the results here.  In the meantime, here are the criteria we've chosen to use for our screen:

Stock Screening: 

Scouting for new stocks will be necessary to build and maintain a good pounce pile.  It can be done at anytime, but not less than once a month, and the ideas can come from anywhere.  Our 3 favorite screens are (in this order):

1)      StockCentral Screener using only the “desirable” metric;
   (defined as Take Stock Quality Rating of 6.7- 10.0; based on predictability of all measures; affected by price)

2)      StockCentral Roster of Quality, which is automatically updated on StockCentral.com and in Toolkit 6 weekly; and

3)      Manifest screen using Financial Strength rating =>70 and Quality Rating =>60.

 Challenge List Criteria:

 All candidates will then be filtered to meet the following criteria:

First Tier--

• Manifest Financial Strength rating => 70 and Quality rating => 60

• Navellier PortfolioGraderPro rating of A or B (strong buy or buy);

• NO pink on the Toolkit 6 Pert Report;

• Minimum of 10% Total Return on the Pert Report;

Second Tier--

• Debt to capital =< 20% (as shown on the front of the Stock Study form);

• Must be in the top 25 industries ranked for timeliness by Value Line.

• (These are not deal breakers.  We just want to track them.)

Stocks will initially be added to the list using the Toolkit 6 default judgments. The metrics will be checked regularly (at least monthly) to ensure they still qualify. Stocks will be dropped if they don’t meet the minimum requirements, and new ones will be continuously added.  We’ll get familiar with these stocks, modify judgments, and review price charts to establish entry and exit points based on support and resistance levels, and compare them with the traditional tools we already use.

Buy Criteria:

The Challenge List criteria will be strictly adhered to in order maintain a list of the highest quality stocks.  The following value criteria will be required to make a purchase:

• S&P 500 Index (FVINX) price trending up on a one year chart (Obviously we'll have to give a little here for now);

• Stock’s price trending up on a one year chart;

• Relative Strength Index (RSI) trending up between 50 and 70;

• MACD line above the trigger, trending up, close to or above the zero line;

• Potential return on the Stock Study form of at least 15%

 Sell Criteria:

A sell price will be established at the time a stock is purchased.  We’ll set the price based, in part, on our Stock Study judgments and the Yahoo 1-yr Consensus Price Estimate. (Mary Ann has been studying the latter for the last 2 years and found it to be fairly accurate.) The portfolio holdings will be monitored closely for any change in the direction of the market or the individual companies.  We hope to hold our stocks for as long as possible, but we will not hesitate to sell if we see our metrics erode.  We may also place stop loss orders, from time to time. We know this could cause premature selling, but if we correctly read the market indicators, give ourselves a reasonable margin of safety, and buy on the upswing, we hope to hold the majority of stocks for a long time – or at least long enough to make a reasonable profit. 

We will either sell all or part of a holding, or put a tight stop loss under a stock if:

• It hits our pre-determined sell price;

• The market and/or stock technical indicators turn negative;

• The quality metrics fall below our requirements

• The Navellier PortfolioGraderPro rating falls below a C (Hold);

• The Total Return on the Pert falls below 10%

Sold Stocks:

We will continue to follow the metrics of the stocks we sell to see if the reasons we sold them are confirmed or found to be flawed.

Due Diligence Profile:

As we wait for opportunities to purchase stocks, we will get familiar with the companies on our watch list.  We will develop a Due Diligence Profile to be completed on every stock prior to purchase.  This will be a check list of items that we believe will most affect our decision to buy.  Lynn

The Grand Experiment
February 13, 2009

Friday the 13th!  What an awesome day to start something new!  Sheryl, Dan and I had been studying, reading, and conversing for months about finding a way to pick better entry and exit points for our club stocks.  Today, we met and decided to make it a formal "grand experiment."  We discussed our the parameters for our screening process and drank lots of coffee (even told a joke or two!).  We each went our separate way to ponder our next move...to be decided at our next coffee clatch on February 20th.  

So how did this all get started in the first place?  Well, we like to blame it on Mary Ann Davis (!) for opening our eyes to "other possibilities."  In her class There Is A Time To Buy, which Sheryl and I saw at InvestEd 2008 (and later shared with Dan back home), she showed us how we could make better buy and sell decisions by adding a little quantitative analysis to our due diligence.  Back in November (2008), well after the recession started and everybody's stocks were in the toilet, the club elected to purchase Quality Systems, Inc. (QSII) at a price derived from analyzing its chart based on Mary Ann's method.  This was a very high quality stock that seemed unaffected by the carnage. We purchased it on November 12th at $35.38 with the intention of holding it forever...or until it stopped climbing. <g>

To our amazement, it continued to climb while our other stocks were tanking.  Dan, who watches the market everyday, noticed in January that QSII had breached its resistance level of $48 and was heading back down.  We all jumped on the club's message board to discuss whether we should lock in our gain.  Remember this was an experiment with only one stock.  We would not have called for this kind of decision on our other stocks.  All but one member responded with a SELL, SELL, SELL.  In the time it took waiting for everyone to chime in (1-1/2 days), it was sold at $43.15 on January 5th.  In the bleakest hour of 2008, a year that sent the Dow down 31.9% and the S&P down 37%, we made a short term trade that earned us a simple return of 22%.  Now I ask you.  If we can do that in a bad market, how might we fare in a good one?  Dan, Sheryl and I seemed to be the only ones excited by the possibilities.  So hence...we decided to band together for this grand experiment.  Stay tuned as we air our achievements and failures for all the world to see!  Lynn