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Another week and more frustration. No, not just because of the roller coaster market. Think about this:
A solid company pulled out a very strong second quarter, earning $45.4 million on total revenue of $261 million.
That was a 42 percent increase in revenue over the same period last year. 42%!
At the end of the quarter the company's backlog of firm orders for delivery within the next year was nearly $572 million, compared with $471 million three months ago That's a 21% plus gain in just one quarter.
The company makes military and law enforcement gear.
In spite of beating wall Street's expectations announcing that it was raising its earnings and sales projections for the year, the stock, which is traded on the NASDAQ exchange, declined more than 6% last week.
The stock is FLIR. I ask you why. Look at FLIR in our charts. Last March 11 the stock began a strong, but not too strong, trend from $24.70 to $45.49 on July 21.
FLIR fell through a recently set Support Level of $41.00. It closed Friday at $39.93.
Could North of the Blue have helped? Yes. One week ago strong buying pushed volume to nearly twice the normal volume. While the price rose, our stochastic
pushed over and fell down through 85% -- a sure sign that stops need to be pulled up very tight. It was clear that something was going to happen. Three days before the fall, the stock broke through its channel down and turned red. A sign urging a quick sale. Two days before the big drop, the stock fell through a long term price line. If you had not sold by then, you waited too long.
Lessons learned: Follow the chart, not your heart. I drive by FLIR Systems regularly, whenever I visit Portland. It is an impressive operation and a history of recovery from a long ago fiddling with accounting rules scheme.
So, had one followed the rules by buying in March and selling in July, an investor would have pocketed a gain of $118% in 132 days. Annualized, that is 328% up. Read our charts.
Believe it or not, we do this every month. It more than pays for the $300 quarterly subscription.
So where now? Be very cautious. As you can see by browsing through the IYY chart we posted this week, the total market index has come out of its Red Window as has nearly every other market indicator. But, we have not yet set the "Stochastic W", for which North of the Blue has become famous. We've climbed the first leg and slid back down to the stat of the second or middle leg. We have not yet seen the correction and then the real climb.
So, our company memos
are still few but essential. Watch the oil price. It won't last forever and I don't want to have to cover sales at inflated prices. Watch gold. It has taken a downturn after several days of selling. If that selling continues, it could become a very good buy. Keep looking for that Buy Watch selection that has everything going for it.
Our Buy Watch stock of the week is gold in the form of Barrick Gold Corp (ABX). It's a short term hold, of course, but right now worth it.
In order to understand today's market, run through the list in "Dicks-Dexes" using "The Big Picture" charts. A fascinating pattern emerges. And it is not all bleak. It provides reasons for optimism and helps us all to understand the need for patience.
How do we do this, you ask? Go to our web site, www.northoftheblue.com and mouse over the menu selection "Charts and Rules". Then, click on "Basic Rules". Or, go to the"Quick Start" menu which provides download information as well as the basic charts you need to get your analysis underway. With our charts, making money is easier than you think.
Questions? Please direct them to dick@dickbrenneke.com.
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