Equity Clock

Can the survivors be trusted? – Technical Analysis

Stocks were depreciated once again on Friday, leaving very few stocks without some kind of damage following the market downturn.   Of the 1661 stocks analyzed in our daily screen, only 154 advanced, 1493 declined and the last 14 were neutral on the day.   The effects of this left stocks with an average loss of 2.44% on volumes 6.61% lower than the day previous.   These losses were found with the greatest severity in small-caps, losing on average 3.04% by market close.   Mid-cap and large-cap stocks fared only slightly better at losses of 2.49% and 2.02%, respectively.

But what of those 154 stocks that gained?   Do they have the strength to overcome the market turmoil?   Chances are, probably not if it hadn’t been for positive news on the day that helped buoy the stocks amongst the losses.   For the most part the gains recorded amongst these outperformers were the result of such events as better than expected earnings reports, analyst upgrades, and extraordinary news that presented a favorable short-term impact to the company’s bottom line.   Favorable news cannot always be counted upon, and therefore it is not always wise to gamble on the outcome or the expected reaction from investors.   Investing must be looked at from the perspective of identify sustainable growth, of which many times these one-time news events do not provide this catalyst.

At present time, the stocks with the most appealing technical indicators are those that have been subject to these one-time news events, which pardoned these equities from being devalued with the rest of the market on Friday.   This is not to say that these news events aren’t the start of something larger, perhaps leading into an uptrend, but the performance outside of this positive reaction based on one day of results is unsubstantiated and therefore more evidence of sustainability is required in order to proceed with an investment.   Some of the stocks showing these positive technical signals are identified below, along with some comments as it pertains to the outperformance on the day.

Chart courtesy of StockCharts.com
KRAFT FOODS INC (KFT)
	30.07	+ 0.86 (2.94%)
Support 2	Support 1	Pivot Point	Resistance 1	Resistance 2
28.76	29.41	29.93	30.58	31.10
Expected Short-Term Trading Range: 29.53 – 30.7
Support & Resistance Analysis		Neutral
MACD Analysis		Negative/Increasing		MACD
MACD vs. Signal		Below/Thinning		-0.087
RSI Analysis		Bullish Centerline Crossover		RSI
Stochastic (Fast) Analysis		Neutral		51.951
50-Day MA Analysis		Above 50-Day MA – Crossover		%K (fast)
200-Day MA Analysis		Above 200-Day MA		74.783
Critical Level Analysis
Comments:
The Company reported strong earnings results after the market close on Thursday, leading to a rally in the price of the stock the following day.   The company also issued favorable guidance of $2.35 cents per share in earnings, which beat analysts expectations of $2.06.   We are currently in the period of seasonal strength for consumer staples and this stock is presenting well as a viable candidate for seasonal returns.
News Headlines for KRAFT FOODS INC (KFT)
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Chart courtesy of StockCharts.com
LoJack Corporation (LOJN)
	4.24	+ 0.25 (6.27%)
Support 2	Support 1	Pivot Point	Resistance 1	Resistance 2
3.88	4.06	4.18	4.36	4.48
Expected Short-Term Trading Range: 4.16 – 4.62
Support & Resistance Analysis		Broke Lwr Resistance (1)
MACD Analysis		Negative/Increasing		MACD
MACD vs. Signal		Below/Thinning		-0.036
RSI Analysis		Below 50		RSI
Stochastic (Fast) Analysis		Bullish Crossover		48.642
50-Day MA Analysis		Below 50-Day MA		%K (fast)
200-Day MA Analysis		Below 200-Day MA		24.444
Critical Level Analysis
Comments:
Analyst JP Morgan upgraded this anti-theft device maker from underweight to overweight.   Increases in market penetration led to the favorable review that resulted in a rally of shares of this company upon Friday’s market open.
News Headlines for LoJack Corporation (LOJN)
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Chart courtesy of StockCharts.com
DealerTrack Holdings, Inc. (TRAK)
	15.98	+ 0.04 (0.25%)
Support 2	Support 1	Pivot Point	Resistance 1	Resistance 2
15.38	15.68	15.89	16.19	16.40
Expected Short-Term Trading Range: 15.76 – 17.95
Support & Resistance Analysis		Neutral
MACD Analysis		Negative/Increasing		MACD
MACD vs. Signal		Below/Thinning		-0.439
RSI Analysis		Below 50		RSI
Stochastic (Fast) Analysis		Neutral		41.019
50-Day MA Analysis		Below 50-Day MA		%K (fast)
200-Day MA Analysis		Below 200-Day MA		27.852
Critical Level Analysis
Comments:
DealerTrack Holdings reported strong financial results following Wednesday’s market close, sparking a positive reaction in Thursday’s session.   The stock traded relatively flat on Friday, avoiding losses, as investors continued to be optimistic of the company’s prospects.
News Headlines for DealerTrack Holdings, Inc. (TRAK)
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Chart courtesy of StockCharts.com
Treehouse Foods, Inc. Common St (THS)
	44.42	+ 0.67 (1.53%)
Support 2	Support 1	Pivot Point	Resistance 1	Resistance 2
42.05	43.23	44.26	45.44	46.47
Expected Short-Term Trading Range: 42.97 – 44.49
Support & Resistance Analysis		Neutral
MACD Analysis		Negative/Increasing		MACD
MACD vs. Signal		Bullish MA Crossover		-0.046
RSI Analysis		Bullish		RSI
Stochastic (Fast) Analysis		Neutral		56.861
50-Day MA Analysis		Above 50-Day MA – Crossover		%K (fast)
200-Day MA Analysis		Above 200-Day MA		75.843
Critical Level Analysis
Comments:
Another company reporting strong quarterly results on Thursday that spared the company from the negativity in the market.   The company also raised its guidance for the current fiscal year.   This consumer staple stock is also well positioned to benefit from the seasonal gains in the sector.
News Headlines for Treehouse Foods, Inc. Common St (THS)
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Chart courtesy of StockCharts.com
KING PHARMACEUTICALS (KG)
	9.59	+ 0.33 (3.56%)
Support 2	Support 1	Pivot Point	Resistance 1	Resistance 2
8.90	9.25	9.56	9.91	10.22
Expected Short-Term Trading Range: 9.57 – 11.98
Support & Resistance Analysis		Neutral
MACD Analysis		Negative/Increasing		MACD
MACD vs. Signal		Below/Thinning		-0.637
RSI Analysis		Oversold but Rebounding		RSI
Stochastic (Fast) Analysis		Bullish Crossover		28.349
50-Day MA Analysis		Below 50-Day MA		%K (fast)
200-Day MA Analysis		Below 200-Day MA		26.667
Critical Level Analysis		Broke Below Previous Trend
Comments:
The company received an injunction on Friday that would prevent competitors from releasing a generic version of its muscle relaxation drug.   This measure appears to be only temporary and would provide King Pharma with the time it needs to negotiate a settlement.   Seasonality is also positive for this healthcare player, but seasonal prospects have been somewhat thwarted as a result of drugs becoming generic.
News Headlines for KING PHARMACEUTICALS (KG)
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Disclosure: Mr. Vialoux does not own securities mentioned in this report.
Disclaimer: Comments and opinions offered in this report at EquityClock.com are for information only. They should not be considered as advice to purchase or to sell mentioned securities.
Data offered in this report is believed to be accurate, but is not guaranteed.