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Vol. 1 # 1-6
Marco's New Highs Report
Vol. 1, # 1 Feb. 24, 2007
Why New Highs?
Why should one invest in stocks hitting new
highs? In his classic book, How to Make
Money in Stocks, William O'Neill noted after
extensive empirical studies that stocks
hitting new highs tended to go higher while
stocks hitting new lows tended to go lower.
While the age old mantra has been buy low,
sell high, O'Neill turned this formula on
its head by advocating buy high, sell
higher. The problem with buy low, sell high
is that it is difficult to determine when a
stock has bottomed.
Of course, this is just one of O'Neill's
observations. He came up with a complete
formula which he called CANSLIM. That's an
acronym for the factors he discovered were
present in winning stocks over a 40 year
period. They include Current Quarterly
Earnings per Share Growth, Annual Earnings
per Share Growth, something New (including
new highs), Supply and Demand, Leadership,
Institutional Interest and Market Direction.
This report will point you to stocks hitting
new highs. It gives you a starting point for
further research. And sometimes I'll even
narrow the field a bit by including some of
these other parameters in my search.
Every week I will publish a list of the
stocks that have hit new highs on the TSX
and post them as web pages. Occasionally I
will also do one on the NASDAQ or the NYSE.
I hope you find these useful.
This week's New Highs on the TSX are now
posted at
http://breakoutreport.com/level1/nav_newhighs.htm
Narrowing the
Search
One of the CANSLIM criteria is to look for
stocks that have grown earnings per share
for five consecutive years. Now, through the
power of Chartsmart, I can run that
criterion as part of a filtered search for
stocks. Because Chartsmart treats declining
losses as EPS increases, I also specified
that the most recent year must have positive
earnings. Incredibly, there are only five
stocks on the Toronto Stock Exchange that
are both within 5% of their highs and have
grown earnings per share for five
consecutive years. Those stocks are:
Interestingly, two have already been
profiled by my subscription newsletter, the
Break Out Report. Because the field is so
limited with this search, in practice I
often look for three years EPS growth rather
than five. This gives you a lot more
choices.
Just for fun, I've noted the prices of these
five stocks and we'll check back on them
occasionally to see how they have done.
Let's do a quick search with the five year
parameter on the NASDAQ.
NASDAQ Stocks
within 5% of their highs and five
consecutive years of EPS growth
This search came up with 50 possibilities.
I'll list the five with the highest prices
and the five with the lowest and we'll check
back on them in a later issue.
Highest priced
Lowest Priced
We'll check back on these stocks every
month. Next week we'll add NYSE stocks to
the mix.
This week's feature article is one I wrote
for Lesley Scorgie's Rich by Thirty
newsletter recently. It's about stock spam.
I called it Spam 'n' Eggs. The link below
takes you to the article.
Be sure to check out ChartSmart! It's a
fantastic tool! Follow the link on the
website. Make sure your audio is on.
Until next week,
Invest well and prosper!
Marco
Marco's New Highs Report
Vol. 1, # 2 Mar. 4, 2007
Tough Week in
the Markets
The markets fell big time Tuesday and
continued to fall during the rest of the
week. When the dust had settled, the TSX
was down 3.60% for the week. The Dow was
down 4.22%. The NASDAQ was worse, down
5.85%. Now some pundits like to think
that gold and the stock markets run
contracyclical to each other. Not so.
The price of gold also tumbled, down
6.20% and gold stocks as represented by
the XAU were off a whopping 9.24%.
Yikes! That's gotta hurt. Especially so
if, like many gold enthusiasts, you're
driven by ideology as well as a view to
investing. A market setback is supposed
to be the comeuppance for Bush's
profligate ways, a reflection of an
economy being driven into the ground by
debt. So why is gold also taking it on
the chin? That's a question I'll leave
to the gold bugs!
But looking at the stock market proper,
did any stocks pull out of the week
hitting new highs?
In fact, there were 204 stocks on the
TSX that hit new highs during the week.
And if you don't count the ones that hit
new highs on Feb. 26th before the market
plunged, there were still 99 that hit
new highs on the 27th or later.
This week's New Highs on the TSX are now
posted. Go to
http://breakoutreport.com/home.htm
and click on TSX New Highs in the left
hand menu.
Narrowing the
Search Once More
Last week we used an extended set of
CANSLIM criteria to narrow the field of
stocks to consider. Using these criteria
we found only five stocks on the Toronto
Stock Exchange that are both within 5%
of their highs and have grown earnings
per share for five consecutive years.
Trying it again after this week's
downturn turned up just one, Logibec
Groupe Informatique. We featured this
stock in the Nov. 20, 2006 issue of our
paid subscription newsletter, The Break
Out Report and it is up 8.76% since
then. This is not surprising as earnings
per share have been rising steadily for
three years now.
To subscribe to the Break Out Report,
Click
Here!
NASDAQ Stocks
within 5% of their highs and five
consecutive years of EPS growth
Last week we ran this screen on the
NASDAQ and came up with fifty stocks.
Now, after the "crash" the screen comes
up with only four! Wow! A turn in the
market sure narrows the focus! Those
four stocks are:
NYSE Stocks within 5% of their
highs and five consecutive years of EPS
growth
We did not run the NYSE screen last week
but we do so this week. It yields just
five possibilities. That's one advantage
of a mini-crash like we had this week.
It really narrows down your search for
possible stocks to invest in. The five
are:
Again, we will check back periodically
to see how these stocks have fared.
Quilmes Industrial, also known as Quinsa
SA, is a Latin American Brewery and has
a very dynamic chart.
This week's feature article is one I
wrote in 2005 for the Break Out Report.
It's about the opportunities that arise
when a stock suffers a fall in price due
to an acute (as opposed to a chronic)
problem. An acute problem is a
short-lived problem that will go away.
The big question this week is: is dip in
the markets this week an acute or a
chronic problem? If an acute problem,
it represents a buying opportunity.
Spam 'n'
Eggs - our article from
last week...the link screwed up so here
it is again.
Feb. 27,
2007 - click this
link to listen to my 20 minute podcast
with Phil Mackesy on HoweStreet.com last
week.
Be sure to check out ChartSmart! It's a
fantastic tool! Follow this link. Make
sure your audio is on.
ChartSmart.
Until next week,
Invest well and prosper!
Marco
Marco's New Highs Report
Vol.
1, # 3 Mar. 10, 2007
Market Rebounds
The markets rebounded this week with the TSX
climbing 1.50%, the Dow gaining 1.34% and the
NASDAQ eking back up 0.83%. The price of gold
also took back some lost ground climbing 1.23%.
But gold stocks as represented by the XAU
compounded their 9.24% loss last week by sliding
another 0.23% this week.
Not surprisingly, the number of new highs on the
Toronto Stock Exchange fell to 133 from 204 last
week. But recall that over half of the new highs
last week occurred on the Monday before the
market drop, so you could say the number of new
highs has gone up since the correction.
This week's New Highs on the TSX are now
posted. Go to
http://breakoutreport.com/home.htm
and click on TSX New Highs in the left hand
menu.
ChartSmart Search
Looking at TSX stocks with a filtered search of
three years of earnings growth and within 5% of
the stock's 52 week high, we get 17 contenders.
Filtering for five years EPS growth, there's
just one - I can't tell you what it is as I may
feature it as one of my selections in the
next of my subscription newsletter, the Break
Out Report. I select one or two of these each
issue which I think have great potential and
profile them in more depth. If you're not
already a subscriber, why not check it out. You
get one month free. If it's not what you're
looking for, cancel within thirty days at no
charge.
To subscribe to the Break Out Report,
Click Here!
What about the NASDAQ and the NYSE? Using the
five year EPS growth filter and within 5% of 52
week highs, we get just 9 NASDAQ stocks and just
18 NYSE stocks. I listed some of each in the
last two weeks in this newsletter and will
revisit them at a later date to see how they are
faring. You are urged to check out ChartSmart's
excellent software. Take their 30 day free
trial. They are at
ChartSmart.com.
What is the Hi/Lo
Ratio?
If you check out the TSX New Highs on the
website, you'll find four columns - Company
Name, Symbol, Date and Hi/Lo Ratio. The latter
is the ratio of the stock's 52 week high to its
52 week low. The table, in fact, is ordered
according to Hi/Lo Ratio. What is its
significance?
Well, if a stock has a positive Hi/Lo Ratio and
is at or near the high, the ratio tells you how
much the stock has risen since its 52 week low.
So a ratio of 1.10 tells you the stock is about
10% above its low point for the year. A ratio of
2.00 tells you the stock has doubled in price
since its low point of the year. And a ratio of
5.64 which we have for Absolute Software, tells
your the stock is worth 5.64 times what it was
at its low of the year. In other words, it's up
464%.
Any stock that is to go on to double or triple
in price or better within a year must first pass
through every ratio up to that point. If it's
between 1.00 and 1.25, it's started on its way.
If it's between 1.25 and 1.75 it is well on it's
way and if it is over 1.75, it has already
proven itself to be an exceptionally strong
performer. The stock has momentum and could go
on to be a double or triple bagger or better.
I haven't done any studies on it yet, but I have
been wondering of late whether the actual hi/lo
ratio number has a statistical correlation to
how well the stock does over the next three
months, six months or a year. The TSX Composite
Index hit its low point on Oct. 11, 2002. That
week had 26 new highs, a pretty small number.
They were a shown below:
Some of the names may be familiar. How did they
do over the subsequent months? I don't know yet
as I haven't done the calculations yet. A good
reason for you to check out next week's issue of
Marco's New Highs Report and for me to write it!
Here's this week's featured article:
The Rich Get
Richer - from our April 18, 2004
edition of the Break Out Report - I took a look
at combining the methodology of buying stocks
hitting new highs with a modified buy and hold
strategy with interesting results. In fact,
after testing it out with an actual portfolio in
2006, I have now incorporated the Rich Get
Richer strategy as part of the way I manage the
Model Portfolio in our paid subscription
newsletter, the Break Out Report.
Mar. 6, 2007 -
click this link to listen to my 20 minute
podcast with Phil Mackesy on HoweStreet.com last
week.
Be sure to check out ChartSmart! It's a
fantastic tool! Follow this link. Make sure your
audio is on.
ChartSmart.
Until next week,
Invest well and prosper!
Marco
Marco's New Highs Report
Vol. 1, # 4 Mar.
18, 2007
Markets Fall...Again!
The markets suffered their
second big down day in three
weeks Tuesday when the TSX fell
255.55 points for a 1.96%
drop. The US markets did
likewise with the Dow down
242.66 points that day and
the NASDAQ off 51.72 points.
By the end of the week,
after minor recoveries, the
indexes were off 1.74%,
1.35% and 0.62%
respectively. Gold eked out
a gain and so did the XAU.
Will the markets continue to
be shaky going forward? It
is futile, in my opinion to
try and guess. Just watch
your individual stocks, make
sure they are fundamentally
sound, and the rest should
follow.
This week's New Highs on the
TSX are now posted. Go to
http://breakoutreport.com/home.htm
and click on TSX New Highs
in the left hand menu.
The Influence of the Hi-Lo
Ratio
Last week we asked whether
the Hi/Lo Ratio we publish
with our New Highs tables
has any predictive value. We
said we would go back to the
lowest ebb in the market and
if any stocks hit new highs
that week, and if so, how
they fared later based on
the Hi/Lo Ratio among other
things. The results are in
and shown in the table
below. We dropped bond
issues and rights issues
which left twenty securities
in the group.
By the end of 2002, almost
three months later, the TSX
had gained 16.14% while our
select group of stocks had
only risen 4.70%. However,
six months after that, on
June 30, 2003, the New Highs
from the week of Oct. 11,
2002 had risen an average of
25.53% to the TSX's 22.61%.
The TSX led by the end of
2003 and is still ahead
today. However, looking at
peak gains, the New Highs
group was ahead handily. But
the New Highs group was
handicapped by the inclusion
of two preferred shares.
These, like bonds, typically
show up in New Highs a lot,
not so much because they are
strong growth stocks but
because they are fairly
stable and don't fluctuate
too much. If those two had
been left out, the returns
for the group would have
been larger. On top of that,
a number of the stocks were
taken over or delisted and
so did not particpapte in
the full time frame.
But the exercise was to see
if Hi/Lo Ratio had any
predictive value. We see
that the lone stock with a
Hi/Lo Ratio over 3, Peyto
Exploration, went on to post
superior performance, up
210% by the end of 2003. The
group with a Hi/Lo Ratio
between 2 and 3 did not fare
as well. One, Hub
International, was down
19.25% by the end of that
year. On average the stocks
were up just 20.97%, less
than half the gain of the
TSX over that period. But
given a bit more time -
until they were taken over,
delisted or to today, that
group of five did very well,
up an average of 264.99% to
the TSX's 125.27%. Of
course, two were A & B
versions of the same stock,
GSW.A and GSW.B and both of
those were big movers which
skewed the result. The 1.5
to 2 group had risen an
average of 23.01% by the
end of 2003, a little better
than the 2-3 group but still
badly underperforming the
TSX.
What these results show is
that Hi/Lo Ratio in itself
is not a good indicator of
future peformance though we
haven't explored it in great
depth. There might be
something to the idea that
stocks with a Hi/Lo Ratio
over 3 are good candidates
for future growth. But
again, the data is too
sparse to draw such a
conclusion.
In point of fact, Hi/Lo
Ratio is noted but not a
deciding factor in my choice
of stocks to include in the
Break Out Report, our
subscription newsletter. If
stocks make the New Highs
list, I look further at
revenues, earnings and all
that other good stuff. Our
track record is excellent.
If you would like to try the
bReak Out Report free for a
month, you can sign up at
http://breakoutreport.com/level1/nav_sales.htm
Here's this week's featured
article:
Losing to Win -
from our May 4, 2003 edition
of the Break Out Report -
Not all your trades will be
winners. Ken tells us in
this article how to cope
with the dismay of a losing
trade and trun it into
something positive.
Mar. 13, 2007 -
click this link to listen to
my 20 minute podcast with
Phil Mackesy on
HoweStreet.com last week.
Be sure to check out
ChartSmart! It's a
fantastic tool! Follow this
link. Make sure your audio
is on.
ChartSmart.
Until next week,
Invest well and
prosper!
Marco
Marco's New
Highs Report
Vol. 1,
# 5 Mar. 23,
2007
Solid Gains for
the Week
My apologies for
the lateness of
this week's
missive. I try
and get them out
on Saturdays,
otherwise on
Sundays before
Noon (Pacific
time) but this
weekend was
quite a busy one
and I wanted to
add some new
tables. So on
with the
show...the TSX,
Dow and NASDAQ
all were up over
3% for the week,
riding on the
optimisim
generated by the
US Federal
Reserve's
decision to cool
their heels on
interest rate
hikes. The
price of gold
rose slightly
but the XAU also
rose over 3%.
Sometimes gold
stocks follow
the market and
sometimes the
price of gold.
From the events
of recent weeks,
they seem to be
following the
general market
more than the
price of gold
itself.
This week I
added two new
tables to our
web pages - a
complete new
highs table for
the NYSE and for
the NASDAQ. Go
to
http://breakoutreport.com/home.htm
and you'll find
all of them
linked in a box
on the lower
left hand side
of the page. I
will only update
the NYSE and
NASDAQ charts
occasionally as
it is a lot of
work.
Our track record
is excellent. If
you would like
to try the Break
Out Report free
for a month, you
can sign up at
http://breakoutreport.com/level1/nav_sales.htm
Rich by
Thirty
Lesley Scorgie,
author of Rich
by Thirty, was
in town this
past week and I
had the pleasure
of having dinner
with her
Thursday and
joining her for
a HoweStreet.com
interview
session at her
book signing at
Indigo's on
Saturday.
Exciting news is
that Lesley's
book is almost
sold out of the
first printing
and a second
printing is in
the works.
And...there are
plans to
translate the
book into both
French and
Korean of all
things. Exciting
news indeed!
Now if Oprah
likes the copy
Lesley sent her,
who knows where
the book might
go! You can
subscribe to the
free newsletter
Lesley and I
publish at
http://richbythirty.com
No new article
this week, but
if you missed
it, check out
last week's:
Losing to Win -
from our May 4,
2003 edition of
the Break Out
Report - Not all
your trades will
be winners. Ken
tells us in this
article how to
cope with the
dismay of a
losing trade and
turn it into
something
positive.
Mar. 20,
2007 -
click this link
to listen to my
20 minute
podcast with
Phil Mackesy on
HoweStreet.com
last week.
Be sure to check
out ChartSmart!
It's a fantastic
tool! Follow
this link. Make
sure your audio
is on.
ChartSmart.
Until next week,
Invest
well and
prosper!
Marco
Marco's New Highs Report
Vol. 1, # 6 April 1, 2007
New Highs
Rising
Our New Highs
page is up at http://breakoutreport.com/home.htm
. The number has increased to 164
from 147 last week even though the
TSX actually dropped a bit this
week. An increasing number of New
Highs is a good sign for the stock
market and the number has been
increasing steadily since March 9th
when it bottomed at 133 New Highs.
It had peaked recently at 328 before
the market corrected. Last year the
highest number of New Highs in a
week was 366.
The Wall of Worry
Lately the newspapers have been full
of bad news about the conomy. As Ken
notes in this week's Break Out
Report, "Demand
for US goods slipped almost 6
percent in January (data is released
one month late). This turned out to
be the biggest decline since July
2000. Along with that core capital
equipment orders dropped over 6
percent. When demand and orders drop
off it sends a worry of a slowing
economy to the bull camp. Thus the
market got hit hard in March." The
continuing heavy federal debt in the
US continues to weigh on the
economy. Housing starts are down.
The housing bubble in the US is
collapsing. Everyone is jittery over
the Iran situation - both the
British sailors seized and the sabre
rattling over nuclear research. Can
it get any worse?
Interestingly, both
bearish and bullish analysts can
make use of such bad news to their
advantage. The bears, of course,
will say, "Hey! Look! The economy's
going to hell in a handbasket.
Better watch out!" But on the
bullish side, there is a nother
intersting concept called the wall
of worry. (Don't you love that
expression?) It says that when
things seem to be their bleakest,
that's when the markets start to
climb. A prime example, of course,
was post-911. The markets closed for
a brief period following the terror
attacks and when it re-opened,
the Dow Jones Industrial
Average had its biggest one
week tumble since 1933 and its
second worst week since 1915. It
plunged 14.3%. That's a hit! Could
things get any worse?
Well, when people
ask, can things get any worse,
that's when the wall of worry is at
its steepest and, in fact, the Dow
bottomed at 7296.93 on Sept. 21,
2001. It then took off like a
rocket, climbing to 10,021.5 by the
end of the year, a 37.3% gain. The
NASDAQ did even better. It gained
41.9%.
Why is that? Well,
everyone had already thrown in the
towel. The sellers had sold. The
holders continued to hold and the
the only ones left to move the
market were the buyers who moved in
to find the bargains.
So have we hit a wall
of worry yet? Are we, in fact
climbing it? That is hard to say.
But the market usually factors
things in about six months ahead.
And the bad news has been stewing
for some time. The market correction
in February was sharp and severe,
though hardly a crash. Maybe in the
context of continuing worries over
war, debt, housing bubbles ad
nauseam, that's all the correction
we're going to see and we are, in
fact, now climbing that wall of
worry.
Of course, the only
way to be certain is to look back a
year from now. Everything is so easy
from hindsight!!!
Spam Scams
If you've been plagued by spammers
and scammers, you'll be delighted by
an article in yesterday's Vancouver
Sun called Internet Vigilantes Go
After Online Scam Artists. See
http://www.canada.com/vancouversun/news/business/story.html?id=c3e7dc58-4bb6-421f-8428-7f225dc9052c
It tells about some Internet cowboys
who bait scammers like those
Nigerian scam guys and sometimes
even play them like a fish on a
line, getting the scammers to send
them money or do weird
things in their greed for ill gotten
gains. It's a hilarious read and
some of these cowboys have websites
detailing their exploits. Check out
http://www.419eater.com/ ,
http://www.yeawhatever.catholiccall.org/ and
http://www.scamorama.com/
But don't try this at home! The scam
baiters advise that unless you know
what you're doing, the scam artists
could get nasty and take revenge on
you if you don't know how to protect
yourself. It's almost tempting to
take lessons in computer hacking so
I can mess with the minds of the con
artists myself, just for fun! I have
on occasion gone as far as tracing
the url of a scammer to a host and
emailing the host to advise him
there is a scam artist using his
site. But that's tame compared to
the scam baiters...my new heroes!
Why Do We Read Investment
Newsletters? - three
short articles on one page discuss
investment newsletters, why we read
them, how to rate them (with a focus
on the Hulbert Financial Digest) and
how we compare.
Mar.
27, 2007 - click
this link to listen to my 20 minute
podcast with Phil Mackesy on
HoweStreet.com last week.
Be sure to check
out ChartSmart! It's a fantastic
tool! Follow this link. Make sure
your audio is on.
ChartSmart.
Until next week,
Invest well and prosper!
Marco
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