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Potential Trades w/Charts: Signs Of A Market Top? by | This entry was posted on Monday, January 23rd, 2012 and filed under Stock Market   Comments Off


Referencing the weekly homework and stock radar, I am highlighting a few of the below for in undervalued stocks.

On the outside, it may look like Monday was a flat day in the markets, but the underlying action was far more bullish than that view provides.  Bonds were weak again helping provide fuel for equities in the form of additional support and “ammo” for dip buyers to put to use.  If bonds continue to weaken this week, all of this talk of a market top forming will likely be far too early.

It seems to me that everyone is looking for a top and trying to predict a market turn.  It seems many market players are expecting something negative to happen and are being cautious, even trying to dip their toes in various short indexes.  It is that which makes me more bullish for the short-term.  It is the unexpected that can catch us by surprise and topple the markets, but the more cautious and prepared we are, the less likely negative news can give us severe damage.  It is not a perfect science, but is a general rule of thumb that has been proven true more often than not over the years.

With bonds selling off this morning and my continued use of  as my shadow chart, I added to select long positions, per my StockTalks.  Usually on a Monday morning I am trimming positions, but after taking profits late last week, I had plenty of capital to put back to work.  If we can continue to see bond weakness, these positions may grow more aggressive.  For now, they are modest bets as I can not completely discount the downside risk this early.  As soon as I have an edge, even if it is just a day trade, I will be very aggressive to net larger gains.  With a significant amount of earnings this week, the FOMC meeting, economic news, and headlines from Europe, we will have plenty of forces at work this week to digest.  Keep your eyes peeled.

I’m still focusing on charts that are showing overall strength with established trend line support levels for favorable risk-reward buys. In a truly healthy market, I am more than willing to buy on breakouts expecting momentum traders to follow. In this market, I am finding that many breakouts are fizzling fast due to overall fearful sentiment and fast profit-takers. With that being said, I am more inclined to make moves near trend line support rather than breakouts.

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Yahoo Finance Profile:

Harry Winston Diamond Corporation, a diamond company, engages in mining and retailing diamonds in Canada and internationally. The company holds a 40% ownership interest in the Diavik Diamond Mine and supplies rough diamonds; and engages in the retail of fine jewelry and watches under the Harry Winston brand. It operates salons in the United States, Japan, Taiwan, Singapore, the People’s Republic of China, France, and the United Kingdom. The company was formerly known as Aber Diamond Corporation and changed its name to Harry Winston Diamond Corporation in 2007. Harry Winston Diamond Corporation was founded in 1980 and is based in Toronto, Canada.

Notes On Yahoo Finance :
HWD has a low forward P/E of only 8.6 with an undervalued PEG Ratio of only .29. It has a negligible amount of shorts in it as of December 30th, 2011 with only 157k shares short on an 84 million share float. HWD has about $83 million in cash, but a significant amount of debt compared to cash (mostly long-term) around $344 million. This will impact long-term holders more-so than those holding with a shorter time-frame. Lastly, the median price target from four analysts is $20, a significant price difference from the current price just above $11.

 

Annotated Chart and Trade Details:

 

Yahoo Finance Profile:

Perficient, Inc. provides information technology consulting services primarily in the United States, Canada, and Europe. The company designs, builds, and delivers business-driven technology solutions using third party software products. Its solutions include business analysis, portals and collaboration, business integration, user experience, enterprise content management, customer relationship management, interactive design, enterprise performance management, business process management, business intelligence, eCommerce, mobile platforms, custom applications, and technology platform implementations. The company’s solutions enable clients to operate a real-time enterprise that adapts business processes and the systems that support them to meet the demands of marketplace. It serves Forbes Global 2000 and other large enterprise companies. The company was founded in 1997 and is based in Saint Louis, Missouri.

Notes On Yahoo Finance Fundamentals:
PRFT has a low forward P/E that is under 12 with an undervalued PEG ratio of only .42. The shorts are minimal in PRFT with only 3.3% of the float short as of December 30, 2011. PRFT has no listed debt on Yahoo Finance with about $2 million in cash. Currently, PRFT is trading at about $11, but the median price target from three analysts is $15.

Annotated Chart and Trade Details:

 

Yahoo Finance Profile:

Voyager Oil & Gas, Inc. engages in the exploration and production of oil and gas in the United States. It primarily focuses on oil shale resource prospects in Montana, North Dakota, Colorado, and Wyoming. As of May 17, 2011, the company controlled approximately 141,500 net acres in the five primary prospect areas comprising 28,000 net acres targeting the Bakken/Three Forks in North Dakota and Montana; 14,200 net acres targeting the Niobrara formation in Colorado and Wyoming; 800 net acres targeting a Red River prospect in Montana; 33,500 net acres in a joint venture targeting the Heath Shale formation in Musselshell, Petroleum, Garfield, and Fergus counties of Montana; and 65,000 net acres in a joint venture in the Tiger Ridge gas field in Blaine, Hill, and Chouteau counties of Montana. It supplies energy and fuel for industrial, commercial, and individual consumers. The company is based in Billings, Montana.

Notes On Yahoo Finance Fundamentals:
VOG is the most speculative of the detailed trades today therefore it is riskier. VOG has EPS growth estimates of 1600% next year with a fair forward P/E of 17. Shorts have a decent foundation with 7.7% of the float short as of December 30, 2011, which is a short ratio of 14. The median price target from five analysts is 4.50, nearly double the current price.

Annotated Chart and Trade Details:


You can follow my trades alongside the 36,000 plus market players who follow me on SeekingAlpha (Shameless promotion). As always, do your own homework to see if you agree. Good luck out there.

Mike

At the time of publication, Kudrna was long HWD, but positions may change at any time.

 

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