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Greetings, Pro-fundity team members -
05-09-03

At the bottom of the Guidepost, a full listing of this weeks picks are shown, in addition to the Charts via the Pick-link.

As a benefit of membership, you have access to all Guideposts (including Archived GP's) and Picks. If you miss a week or two for whatever reason, you will be able to go into the Historical Guidepost link to catch up with both the weekly guidepost and the 30 picks made for the week.

Greetings, fellow Pro-fundity team members

1. Last week we showed the dramatic success of our picks over the past nine weeks. We attribute this success to the “Wind-to-the-back” mentality Pro-fundity has used for many years. Although our focus has been rolling stocks, short-term swing trades, and high volatility strategies, we’ve placed equal attention on company fundamentals in selecting a data-base for picks each week. This market bias-to-the-positive underlies the trading strategies, methods and techniques we study each week.

2. The following charts compare last week’s pick success to one six weeks ago.

   
   

   
   

   Figure 1 - 5/2/03 Picks compared to 3/28/03 Picks

3. Six weeks makes a big difference in the performance figures. But notice, both time-frames include losers. These picks are never presented with the intent that they would all be winners. The market never cooperates to that extent. We line the probabilities up and make intelligent guesses based on what the chart patterns tell us, then take a very defensive position to reduce our risk. Which tickers on the 5/09/03 pick list will be big winners? Or, why would we have chosen to invest in IGLD six weeks ago, rather than LAB? Let’s go back in time and ask that question with the data in front of us.

   
   

   

   Figure 2 - How the daily chart pattern looked on IGLD six weeks ago

4. What do we see in this chart? The price pattern looks like a decreasing wedge, with strong volume support the past three days. The past five or six weeks look like a consolidation period with what may be a change of character at the end. The stochastics is on the low end, not much of a message in either MACD, OBV or RSI. Always take a look at the weekly-bar pattern.

   
   

   

   Figure 3 - How the weekly chart pattern looked on IGLD six weeks ago

5. The weekly pattern punches up the strong volume support in January. The OBV moved into positive territory big time as a result of this volume activity. This pattern often precedes a momentum move in price with the volume-kick the instigator. Okay, compare IGLD, the best six-week performer, with LAB, the worst performer. Are the differences strong enough to push us in the right direction?

   
   

   

   Figure 4 - Daily chart pattern for LAB on 3/28/03

6. This pattern looks a little weak coming off a downtrend, however the volume-kick in early March suggests a change in character. The stochastic seems supportive, but no help from RSI or MACD. OBV responded to the volume. Look at the weekly chart:

   
   

   

   Figure 5 - Weekly chart pattern for LAB on 3/28/03

7. There is still that nasty downtrend, not yet broken by the increased volume. The indicators do not foretell a change in character yet. Although, a change will show up on the daily pattern first. So, weigh the evidence and cast your lot. Lets look at one more comparison between the second best and second worst in this watchlist. The following chart is the daily for QDEL.

   
   

   

   Figure 6 - Daily chart pattern for QDEL on 3/28/03

8. The moving averages on the price pattern cross in this time frame, suggesting no long-term downtrend. Not much help from RSI or MACD, although the OBV has remained strong these three months. Stochastics are supportive with high volume days near the pick date. Let’s see what the weekly looks like.

   
   

   

   figure 7 - Weekly pattern for QDEL on 3/28/03

9. In this case, a good volume pattern supports the January peak, the MACD looks ready to cross, with strong OBV. Little help from stochastics or RSI. Now see what the poor performer looked like.

   Figure 8 - Weekly chart for NATI on 3/28/03

10. The price MA’s show an uptrend which is good. The indicators are trendless patterns which is normal for an uptrending price pattern. The oscillators (stochastics, RSI, MACD) provide better signals in sideways price patterns. The weekly picture follows:

    Figure 9 - Weekly price chart for NATI on 3/28/03

11. The slight price uptrend is evident since December, although the stochastic seems to show a decent pattern in the longer term. It is near its top (over-bought) limit. MACD and RSI are inconclusive, while OBV shows a slight positive divergence the last couple of months.

12. Answers are elusive. But that is what the market pays us for, taking risks. We attempt to reduce the risk by using all the supportive material possible. I’ve only included a few common indicators in this discussion. You may have or find different indicators particularly useful in your own analysis. It would be helpful if you shared what makes more sense to you in your trading activity. I’ll include them in future guideposts. So, this kind of activity is most helpful in coming to a trading strategy that works for you. Always review what went right and what went wrong. Going back in time is a great way to use valuable time to look at what turned out to be winners and losers. We’ll review other learning activities in future Guideposts. Stay tuned.
    05-09-03 Pick Selection:

    Main Picks:
    COB,DPII,DTAS,GNTA,GTRC,IO,KLM,PNK,RGEN,SPRT
    Breakouts:
    BEC,CEDC,DRRX,HCP,IES,KOSP,ORLY,PAX,QDEL,TPTH
    QuickPicks:
    ABY,CHL,DRRA,IOM,LPNT,MNST,NUS,OCLR,PDG,PSD

    For detail and followup on Pro-fundity Tradescape,
    find the link on "Advanced Trading Tools" on the home page.

    Be Diligent
    Take Action!

    

    
    
    
    
    

    
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