Sunday, March 29, 2009

Anatomy of a Stock Pick

I decided after the recent pullback to look at the last couple of day's SA picks to look for a good Monday winner should the bull run resume. I analyzed AFK, CELG, STZ, DF, GILD, MKC, SMTC, and SRCL. I quickly applied the oversold rule, looking for stock whose %K was less than 30. This left me with Dean Foods, and McCormick. I looked at their yahoo finance pages to see if their was any recent news that might help or hurt. I saw a downgrade on DF and several new ratings on MKC, all good. I the broke out my Amibroker with the pattern explorer plug in to look at the Schaff Trend Cycle, ADX, Patterns,Taio, and volume vs. 50 day MA. I saw a wealth of information, but the clearest for me was the expanding triangle on MKC showing progressively higher swings in highs and lows, thus the expanding triangle adage. MKC was bottoming at the far bottom of the pattern, and had a large upside to the upper side open. That sold me. I closed all my micro holdings in the anticipation of a sell-off except for CENX , with its impending and much talked about buy out or tender. We'll see on that one. But I expect to take a good position with MKC on Monday if the futures look promising, and maybe a smaller position with DF. I have attached the expanding triangle pattern that caught my eye.

Have a good one,


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