Ian Woodward's Investing Blog

I am often asked “But Ian, how can I find potential candidates in a down market that still may be providing gains on the long side, rather than sitting in my foxhole?” Of course those who just can’t tolerate withdrawal symptoms want to look for the reward and are prepared to take the risk…i.e., roll the dice in the face of a hurricane.  Well, for those who are not feint of heart, here are 15 stocks that have shown the highest count across several HGSI Proprietary Groups. 

Taking a feather out of my associate and good friend Ron Brown’s cap, I felt I might show you the results of the top 15 stocks for the newly developed function in the HGSI Software, called Group Inclusion.  As he showed you in his video today, this new feature shows the stocks with the most hits in selected StockPicker and SmartGroups.  Shown below are the 15 stocks with scores of 6 to 9, and the groups that had 3 or more “hits” for these stocks.  Note…Column C, labeled Count, is the number of groups that had the stock listed, but the total score shown may not equal that shown on any one row, since I had to cut the view off so that it would at least be readable.  For example, SVA is shown with a count of ‘9”, but only 7 are shown on the list; the other two were in the Health Care Sector and Best Stocks under $10.

I have absolutely no idea if there will be opportunities in this Group of stocks, but it gives us a basis to do paper studies at the onset of a bad down-turn to see if there is anything we can glean out of this lot.  I suggest you put these in QuoteTracker or whatever other Real-time on-line software you use and watch how they do tomorrow and through the week.   

One thing which I find gratifying is that those who have been using their favorite Groups to hunt for stocks will find to their relief and satisfaction they are all prominently shown in columns “D” through “I”.  Naturally the HGS 100 should clock up the most hits, but ignoring that one, your best hunting ground for ferreting would appear to be in the favorite groups you already use as shown. 

As far as I am concerned this is a paper study to see if HGSI can find the proper fish swimming upstream against the tide…It is always “Your Call”.  Ron and I will focus on this feature on our newsletter due this week, and maybe we will shed more light on its performance and uses then. 

Please let me know if this blog is of value to you as it took a fair amount of research to make the simple chart above handed to you on a platter.  Or, are you sitting in your foxhole twiddling your thumbs for better times?  Best regards, Ian.

One thing we have put to bed is that when the Hindenburg Omen speaks, HGS Investors listen.  Hopefully most of you took cover and are sitting in your foxholes or else took advantage of the weakness in the Market Indexes and used leveraged Inverse ETF’s to give you maximum gains using the likes of the QID.  Those Indexes with the fattest profits took the worst shellacking and needless to say the Silverback Gorillas got hit hardest and gave up the most profits.  Now for sure you understand the game and how to play it…it is great fun hopping on extended stocks to make the biggest gains in the shortest time in buying the Rockets, but the higher they rise the harder they fall and I trust you were selling those great stocks before they turned to Rocks.  Buy Rockets and Sell Rocks! 

Now of course the $64 question is how big will the drop be, so we bring out our measuring rod and arrive at the targets for Low, Lower and Lowest?  Since I mentioned that Big Foot put in an appearance two days ago and then disappeared into the bushes when the market came roaring back in the last half hour, yesterday’s Market Close made sure to indicate that he had appeared again with a vengeance.  So we will use him for the Low Target, King Kong for the Lower and Godzilla for the Lowest…indicating a Bear Market!  A good friend suggested that would be a good way to keep it simple, so why not? 

The Measuring Rods:

As we can see from the chart, we are already down ~8% from the High to Low on both Indexes, and do not have much further to go to chalk up 10%.  Given that we finished the day on Friday close to the lows, it would seem reasonable we will at least test the 10% level early next week if not on Monday.  It is always wise to have tests-of-reasonableness and the obvious measuring rod… (I love that term coined by another good friend…it reminds me of the guys with deep poles checking the snow level or the yard marker chains on the sidelines of the football pitch), …for doing this is the Limbo Bar, which is the inverse of the High Jump. The short answer is the numbers seem reasonable for now as shown below.  Anything lower, immediately will confirm we are in for a worse time than last August 16, so you will need to button down the hatches fairly tight if that happens:

1. S&P 500:  Last time the Limbo Bar for the 50-dma was -5.6427 and since the current 50-dma is at 1515.52, this suggests a target of 1430 for the S&P, slightly less than 10%.
2. NASDAQ:  Last time on August 16, this went down -5.5434 for the 50-dma, and since the 50-dma is currently at 2717.98, we could get to 2567, slightly more than a 10% correction.

 For completeness, we should look at the potential of a Bounce Play from an oversold situation, where we have had three hefty down days in a row and the quickest way to dispense with that target is to first see these two Indexes repair above their major resistance levels at either the 200, 50 and eventually the 17-dma.   So there you have it, Game Plan and Targets all set for Monday and now the scenarios are: 

1. Stay in your foxholes until we get a “Bingo” followed by a Eureka signal
2. Find items to short, but you must be super nimble
3. Alternatively, look for Silverback Gorillas least hit for the upside scenario, should the market decide to give us a Bounce Play…don’t bottom fish now; it’s usually a waste of money. 

Let the market tell you which way to go.  It’s always “Your Call”.  Best Regards, Ian.

Helicopter Ben didn’t have any golden parachutes today for the Stock Market in his address to the Finance Committee and it was apparent he had no real solutions to the difficult alternatives he faces…hence he is caught between a rock and a hard place. If he continues to placate the Financial Community with more rate cuts, the lower the dollar goes, the higher the price of oil, the more the risk to inflation.  If he does nothing, the financial fiasco can continue to bubble and ultimately lead to a financial crisis.    Be that as it may, the Stock Market didn’t like what it was hearing and Big Foot came out of the bushes again today after that heavy 360 point down day in the DOW and another big wallop today until the bargain hunters came back in during the last hour. Big Foot disappeared in the bushes but is still lurking in the wings.   Anyone who was nimble had a field day today, but most conservative longer term buy and hold types were either sitting on the sidelines or already in their foxholes.   But you know all that and the $64 question is where next?  It’s not difficult:  For the first time, the big five have been hit, not enough to cause severe damage but enough to put a spanner in the works: 

1. RIMM had an $18 spread and eventually gained back half the drop for a 6.15% loss.
2. BIDU had a $52 drop and recovered $10 but finished with a 10% loss for the day.
3. AAPL had a spread of $19, recovered$8 and finished with a 6% loss.
4. GOOG dropped $57, recovered $14 and finished with about a 6% loss.
5. GRMN had already been badly hit and is at least 24% off its highs so is a broken stock.

It goes without saying that the Leaders which are all in the NDX (Nasdaq 100) were hit with a -2.92% haircut today and the Nasdaq was little better with a 53 point drop and down 1.92%.  Surprisingly, the S&P 500 recovered to be essentially even and the NYSE and Russell 2000 were actually positive.   It’s far too early to say there is rotation until we see the follow through reaction tomorrow and being Friday we can expect that many traders will be looking to vacate their positions before the weekend. 

To rub salt in the wounds, the Chinese Silverbacks I gave you the other day have collectively given up 9.15% in a week!  On the rosy side, FSLR and JASO are flying high so the Solar Stocks are back in big business due to the blockbuster earnings report by the former.  Likewise, the Chemical Specialty Group was tight and held up well.  Net-net, I can’t make a silk purse out of a sow’s ear.  The prudent approach is to wait and see till the dust settles and sit on the sidelines, UNLESS you enjoy volatility and know how to use your trump card which is “Nimble”.  If you do, then sharpen your pencils for both sides of the coin, shorts and longs and you will do extremely well if you make the right calls quickly.  Late breaking news says there is now an Ultra Short Chinese ETF called FXP, which came out today.  You judge for yourself where the odds are right now with the picture below.  There is more to go on the downside before it gets to the OK Corral again.  Just watch the Red Line in the Sand. 

Best Regards, Ian. 

>>>(Ian many thanks for this and for mentioning my blog. As you realise, I am a fan!)<<< 

I tried to respond to you on your website, but it wanted my name and password from what I could gather, so I had to post my message here and hope that you will recognize your mascot from your site and see this response: The feeling is mutual, but I only wish I could read your notes and write in your language as well as you can in mine.  I am glad you and your readers are enjoying my blog.  Once this correction is over, I will be signaling it with an Indicator called “Bingo”, which should be at the lows of the market correction, so keep an eye out for that.  Then hopefully, it will follow up with an “Eureka” signal and that would be the time for the “All Clear”. It may be days or it may be weeks before it comes.  Tonight “Big Foot” should be the headline! 

I’m sure my supporters won’t mind seeing my response to your kind gesture, which has a heads-up to come in the message…we call it a winky-winky.  If you do wish to respond, please leave a comment in the place indicated below.  Alternatively, you can always respond to ian@highgrowthstock.com 

Once again, many thanks, Ian.

Readers of this Blog had ample warning that the Hindenburg Omen was firing Canons to Right and Canons to Left as they volleyed and thundered.  I trust you took heed and got on your bicycles and went the other way rather than into the Valley of Death with the Six Hundred!  Big Foot the Bear is lurking in the wings, ready to pounce. 

Who knows whether this is just another shot across the bow or the Big Correction we have been waiting for?  It doesn’t matter…the more important thing is we had a Game Plan, we staked out the boundary conditions and today the Bulls fumbled the ball and the Bears have it.  I suggest you go back and look at the Blog on November 3^rd called “Ian’s Musings – Some Principles of HGS Investing”.  The Lines in the Sand are all drawn for you and not only 1490 but also 1476 have been broken today on the S&P 500, so now we wait for tomorrow and then next week.  Why? Because today was another 360 point day down on the DOW which makes this #5 this year and we need to see what happens tomorrow and a week from now to confirm we have repaired or we are in a lot more trouble.  

Of course tomorrow brings a new day and either there is a follow through to the downside or yet again for the umpteenth time the Bulls see an oversold situation and come charging back into the same Silverbacks we all know and love.  However, we have a few more wounded than before and you know by now that the likes of GRMN, DRYS, EXM, AKS, CLF, CROX, FTK, and VDSI to name a few are now broken or breaking down.  Not enough to declare that the party is over, but enough for one to be careful if you are tempted to roll the dice when there is an oversold bounce.  Play near the exits before you get trampled on.  Anything lower and there will be a good deal of hurt before the Santa Claus hopefully kicks in.  November and December are traditionally good months, but we will have to wait and see as this financial fiasco unravels further. 

Keep your Powder Dry!  Best Regards, Ian.