Market Lab Report - Weekly Review of PP and BGU Reports for the Week of April 18-22, 2016
This week there were only two PP and BGU reports sent out as the market begins to slow down a bit. Below are notes from the Trading Diaries of Dr. K and Gil on these stocks:
New Oriental Education & Technology (EDU)
GM - EDU has been a good performer since we first put it on as a pocket pivot within the base on 4/13. The buyable gap-up this past Tuesday came after the company announced a strong earnings report, and it has continued higher since. Only a pullback down close to the intraday low of Tuesday's BGU day at 37.26 would offer your lowest-risk entry. Notice also that this 37.26 BGU intraday low coincides with the 10-day moving average at 37.25, so both can serve as guides for support on any pullback from current levels.
Dr. K - The email on EDU was sent when, after having gapped higher, it was trading roughly mid-bar then continued to rally for the remainder of the day to close near the top of its trading range. Sometimes, one must act fast and buy upon receipt of the email as the risk given EDU's intraday lows at that point in time was still relatively small.
John Bean Technology (JBT)
GM - JBT is expected to announce earnings on Tuesday, so I would not be interested in trying to play "earnings roulette" with this. The stock has had a decent price run over the past 5-6 months and this is its third base breakout over that time period. Interestingly, JBT has bucked much of the market weakness seen in late summer 2015 and in January of this year as it has steadily built base after base on the way up. For my money, however, this stock is far too thin for me to play, as I prefer bigger stocks trading more average daily volume. In general, larger average daily volume = greater institutional participation, although this does not apply 100% of the time. Smaller names with outstanding potential can often be accumulated by small-cap funds, albeit in smaller size given their low liquidity.
Dr. K - JBT gapped higher then undercut the low of the gap up day the next day by more than 1-2% so should have been sold. Typically, a 1-2% undercut of the low of the gap up day is permissible. The market has favored larger cap stocks thus given the challenging nature of this environment which has been with us for quite some time, it is best to have any many variables stacked in your favor. That said, if you wish to try your hand at any smaller cap names, a smaller position size or a tighter stop loss is recommended.
This information is provided by Virtue of Selfish Investing, LLC (VoSI) is issued solely for informational purposes and does not constitute an offer to sell or a solicitation of an offer to buy securities. Information contained herein is based on sources which we believe to be reliable but is not guaranteed by us as being accurate and does not purport to be a complete statement or summary of available data. VoSI reports are intended to alert VoSI members to technical developments in certain securities that may or may not be actionable, only, and are not intended as recommendations. Past performance is not a guarantee, nor is it necessarily indicative, of future results. Opinions expressed herein are statements of our judgment as of the publication date and are subject to change without notice. Entities including but not limited to VoSI, its members, officers, directors, employees, customers, agents, and affiliates may have a position, long or short, in the securities referred to herein, and/or other related securities, and may increase or decrease such position or take a contra position. Additional information is available upon written request. This publication is for clients of Virtue of Selfish Investing, LLC. Reproduction without written permission is strictly prohibited and will be prosecuted to the full extent of the law. ©2016 Virtue of Selfish Investing, LLC. All rights reserved.