Stock Market Analysis Video 9/10/2010

The stock charts used in this presentation are provided by WONDA ® Copyright © 2016 William O’Neil + Co., Inc. All rights reserved. Unauthorized duplication, modification, photocopying or distribution in any form is strictly prohibited.

Editor Paul Goodwin says it's been another good week, but not really a decisive week, in the market. We've got some support for the markets this morning when good unemployment news in the form of diminishing new claims for unemployment showed up, and markets opened up well on that news. Stocks discussed include Acme Packet (APKT), Aruba Networks (ARUN), Netflix (NFLX), (SOHU) and China New Borun (BORN).

Paul Goodwin Paul Goodwin
Emerging Markets Specialist, Analyst and Editor of Cabot China & Emerging Markets Report

A researcher and writer for over 30 years, Paul Goodwin has been a member of the Cabot investment team and editor of Cabot China & Emerging Markets Report since 2005. Under Paul’s stewardship, Hulbert Financial Digest rated Cabot China & Emerging Markets Report  the number-one-rated newsletter of 2006 with a 78.6% gain for the year, the number-one-rated newsletter of 2007 with a  74.1% return, and is currently the top-performing investment adivsory for five years with a 17.7% annualized return as of 2/28/10. Cabot China & Emerging Markets Report was also named 2007 Investment Letter of the Year by Peter Brimelow of MarketWatch.


And now a word from : Timothy Lutts, Cabot President and Chief Investment Strategist

Dear Fellow Investor,

It was recently the birthday of my father, Carlton Lutts, who published the first issue of Cabot Market Letter in October 1970. He turned 84, and though he retired from this business a few years ago, you can bet he's still passionate about investing, and still has a list of favorite stocks, like Apple (AAPL) and Intuitive Surgical (ISRG). 

He also likes when I write about him.

So today I want to start by drawing a picture of my father as he used to work, sitting in his favorite Naugahyde easy chair, and paging through his chart books. These books, published monthly by Securities Research Company of Boston, had charts showing the price and volume action of hundreds and hundreds of stocks ... all in alphabetical order. Also on the charts were lines showing earnings, dividends, and relative performance (the ratio-cator), as well as indications of splits, and notations for special events like changes in management or secondary offerings.

My father would sit in his chair and methodically turn each page, examining the charts in search of the patterns he knew were most favorable, and marking them up with his comments. He'd write the names of the best charts on front of each book. Then, as the days went by, he'd update these charts by hand, tracking the performance of the stocks he was following. 

I still have many of these books in the basement, as a reminder of our roots. And as I pull them out, I can see what stocks he was following back then.  I can also go back to old issues of Cabot Market Letters, but the chart books were the "source material," and they were invaluable for pattern analysis.

For example, if I look at the chart book of December 1981, which included 1,105 stocks, I see that he was following Aetna, AMF (sporting goods), American International Group, Diebold (security systems), Dow Jones, Kansas City Southern, Manor Care, Southland (parent company of 7-11 and Gristede's) and Warner Communications.

A lot of those worked out very well.

Today, of course, we have the Internet, where the charts are updated automatically.  But the trading patterns are the same. And our system of stock selection is the same, too; we still hunt for charts with favorable patterns, and then dig to see if there's a compelling fundamental story.

For example, one of our favorite patterns is a young stock, one that came public in the past year.  We like it to be hitting new highs with regularity.  We like it to be outperforming the market.  And we like trading volume to be growing, indicating that more institutional investors are supporting the stock.

Michael Cintolo, the current editor of Cabot Market Letter, found one of these stocks recently and recommended it to his readers, and I want to tell you a little about it here.

The stock came public in July 2009, soon after the market had bottomed. It started trading at 7.  By the end of September it had hit 9, and by the end of December, it had hit 10.

Of course, the broad market was doing well in this period, too.  But this stock's relative performance line (the old ratio-cator) told Mike that this stock was performing better than the market, and thus was worth learning more about. 

So Mike learned about it. He wrote about. He watched it. And we talked about it.

It turns out the company is in the natural resources business, but unlike many in the industry, it's young. It was founded in 2004, by industry veterans with expertise not in mining and smelting but in valuing and trading metals businesses.

And since that founding, these veterans have acquired five key small companies that give it a vertically integrated global operation with a lot of synergies. The heart of the business is silicon.

Business suffered in early 2009, as the global economy slowed, but it's bounced back rapidly since the bottom, and earnings estimates are now being raised.

Even better, institutional investors are growing increasingly aware of the stock, and aware of the capable management that has built a moneymaking operation out of five disparate units.

The more I learned, the more I grew to like the stock, and its chart.

So this week I wrote about it, in the issue of Cabot Stock of the Month that was published yesterday.

If you want more details, I'll be happy to supply them. All you need do is take a no-risk trial subscription to Cabot Stock of the Month.

Not only is it priced so low that every investor can afford it, it's also designed so that subscribers get a taste of a multitude of investing styles.  I edit it, and every month, I choose a new stock to highlight, which might be from Cabot Market Letter, (growth), Cabot China & Emerging Markets Report (emerging markets), Cabot Top Ten Weekly (the strongest of the strong stocks), Cabot Green Investor (Green ... obviously) or Cabot Benjamin Graham Value Letter (value).

I call this approach Spectrum Investing, and I think you'll like it because you'll get to see a variety of investment opportunities from a variety of investment styles. Call it a smorgasbord, if you like.

For each stock I explain the "ruling reason"--the major factor that's going to drive the stock higher--and why shares should prosper in the current market climate. And I explain how you should invest in it (buy all your shares right away, on a pullback, averaging in, etc.).

I also provide weekly updates, so you'll always be in touch with my latest thoughts, especially when to sell and book profits.

For new subscribers, the price for 12 issues is an absurdly low $49, a price you'll recover with your very first profitable investment.

To get started, simply click the link below.

Order Now Learn More


Timothy Lutts

P.S.  I'm happy to send you the free Cabot Wealth Advisory, but if you want our best investment advice (particularly the weekly updates), you really need to subscribe to one of our regular services.  So take a no-risk trial subscription to Cabot Stock of the Month now, and watch your profits start growing, just like those of my current subscribers.

Give Cabot Stock of the Month Report a try today.

Stock Picks


This stock could rise 50% before becoming fairly valued.

This hot technology company is growing like a weed, thanks to products that speed up cloud communications.

This stock is somewhat well known, but far from well loved.

Cabot Wealth Advisory

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