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Short Form Buffalo Trader Bullish Reversal Report 10/22/2010

For the time being, this will be the new format, showing only the basic U.S. stock index momentum, the bullish reversals in ETFs and bullish reversals in stocks. I will periodically comment on major issues at critical times, but during the time I am attempting to build the algorithm required to download signals from almost 1300 stocks that I have built models for using NeuroShell Day Trader Professional, this is what I will leave you with. Most who have commented (and I have received, thankfully lots of comments with great appreciation to readers) want to see the reversals and not necessarily trade signals I generate. That makes life simpler for me, though at some point I will discuss methodology for building your own models. For now, I will present the data with little commentary. I will always respond to readers’ comments. This blog will steadily evolve as the time I have and the technology I use evolves. Thanks for your patience during this transition.

For 10/22/2010:

                                     $INDU      $SPX         $COMPQ     $RUT

Monthly Momentum   Pos            Pos              Pos              Pos

Weekly Momentum     Neg (OB)   Neg (OB)   Neg (OB)     Pos (OB)

Daily Momentum        Neg             Neg            Neg              Neg

N means neutral, Neg means negative, Pos means positive (OS) means oversold and (OB) means overbought. The value to price estimate (it is not a guarantee, only a cash flow based estimate) can be defined loosely as a multiplier of price. A number higher than one means the stock is undervalued using this model and a number less than one means the stock is overvalued.

Index and ETF I-shares Bullish Reversals (Note: to look up quotes for the Dow Indexes (starting with DJ or DW, add a dollar sign. No dollar sign is required for the ETFs beginning with other letters.) Today’s list includes only those ETFs with a 50-day moving average of daily volume greater than 100,000 shares:

Company Symbol Exch. Industry Sector
Hldrs Retail RTH xA ETFs (Specialty\Theme) ETFs
PwrShrsEmrgMkt PCY xA ETFs (FixedInc\Other) ETFs
PwrShrsIndiaPrt PIN xN ETFs (Foreign\Country) ETFs
Nuveen DivCmdy CFD A ETFs (Commdty)\TotRtn) ETFs
ProShrsUlShtSmc SSG xA ETFs (Short) ETFs

 

The stocks listed below are ranked by pattern bullish reversals based on a momentum indicator. Each stock by sector is listed with the cheapest stocks on a near-free-cash-flow value/price basis at the top, and more expensive stocks on that basis farther down each sector list (they are listed alphabetically):

Company Symbol Exch. Industry Sector
Tower Int’l TOWR N Auto & Truck (OEM) Auto & Truck
Lennox Int’l LII xN Building (A\C Heating Pds) Building
Cypress Semi CY xN Electronic (Semicndtr Mfg) Electronic
Cephid Inc CPHD xO Healthcare (Instruments) Healthcare
Ancestry.com ACOM xO Internet (E:Commerce) Internet
EatonVanceEnhEq EOS N Market (ClsdEndFndsDom) Market
Fibria Celulose FBR xN Paper Paper
CompanhiaBs ADR CBD xN Retail (Supermarkets) Retail
Electrn Arts ERTS xO Software (Educ\Entr) Software
Sonic Solutns SNIC xO Software (Desktop) Software

Stocks that almost passed the neural net screens but just missed: ERTS, but sadly, this one did not meet value criteria either, so it did not pass.

Note:  For the most part, U.S. equities did nothing yesterday, though small gains were made on the indexes. Once again, software names hit the list, but none of these names were huge bargains, so they did not make the list. CY is marginally favored as a long entry with tradable statistics, but again, it could be influenced by a market that is coming up against previous price resistance and is rather extended from the rally that began in late August.

Momentum stocks can and do still work, but since this method will typically not pick them, we have a dearth of selections. Any near term correction, however, will reveal new set ups should volume continue to be strong. Patience simply is needed to take advantage of them. Daily momentum is still negative as is weekly momentum, so the odds of that correction are a bit increased. Until we see it and we see patterns that fit the trade plan, then one must protect capital.

Take care,

DBB

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