Percolating stocks

Not hard to notice all the coffee stocks advancing nicely. Today’s movers include Green Mountain Coffee Roasters (NASDAQ:GMCR), up 39%, and Diedrich Coffee (NASDAQ:DDRX), up 28%. That’s hot coffee! DDRX was a Stock Trends breakout stock, recording a Bullish Crossover last week. It’s aggressive surge was in keeping with some other coffee stocks. Caribou Coffee Co. (NASDAQ:CBOU) is another that made the Stock Trends Picks of the Week report recently. Include in that group of java movers icon Starbucks (NASDAQ:SBUX), joining DDRX and CBOU as selections. GMCR was an earlier Stock Trends Pick of the Week selection at $41.50 in the early days of February. It’s trading at $73 today. That’s a real buzz!

TMX Group

A Bullish Crossover stock at the end of March, TMX Group (TSX:X)  rallied off support from the intermediate trend line (the 13-week moving average) last week. Look for X to move through price resistance at $38.19.

The trend roadmap

When to be in a market, when to be out? This is the basic evaluation trend analysis attempts to deliver to investors and traders. The underlying assumption of this approach is that stocks trend as market sentiment builds in one of three possible directions – up, down, or flat. In the case of bullish or bearish trends, investors are best to harness these forces and allow the market to deliver profits. For that reason investors should gravitate toward Stock Trends Bullish (if holding long positions), or Stock Trends Bearish (if holding short positions, with qualifications).

Although there is no certainty to price action, trend followers must determine if the prevailing trend is waning and be alert for moments when sentiment is shifting. In Stock Trends parlance these moments of weakening trend are signalled by a Weak Bearish or Weak Bullish indicator. Investors should be watchful of these stocks and ETFs. The triggers for buying and selling are often being hit.

Quick reference Guide to the Stock Trends symbols

Extra bases for ONY, TUN

Stock Trends Portfolio is overdue for an outlier winner. Infield hits and quick out innings hardly make for a profitable trading system. You need a home run every so often.

Perhaps one of the current holdings will deliver. Both Oncothyreon (TSX:ONY), up 26%, and Tundra Semiconductor (TSX:TUN), up 15%, had a great session today.

Technically speaking

Tech stocks have been among the leading sectors in the rally since the market low. Currently, the S&P Technology Index is outperforming the S&P/500 by 14% over the past three months. Among these performing stocks are the likes of Corning (NYSE:GLW), Research in Motion (NASDAQ:RIMM), Cisco Systems (NASDAQ:CSCO), and Motorola (NYSE:MOT). Many of these holdings have been recent Stock Trends Picks of the Week.

An exchange traded fund heavily weighted in these stocks is iShares North American Technology - Multimedia Networking Fund (NYSE:IGN). It has traded actively in the past month as weekly share volume is now 5-times it’s previous average. IGN has been Stock Trends Weak Bearish since the end of March and has advanced from $17.35 to its current $21 level since that time. It has had a nice string of weekly higher highs and higher lows. Look for continued price momentum in IGN.

Food stocks shopping bag

Although the market’s attention is oft in other sectors, consumer staples and related services are providing investors with a good trend trading opportunity. In the the current economic context this is an expected rotation, although the S&P Consumer Non-Cyclical Index remains in a bearish trend. A select group of food products and food retailers stocks outperformed the market in the last quarter and are showing up in the Stock Trends trend filters. Some stocks that are currently Stock Trends Weak Bearish and worth watching include Delmonte Foods (NYSE:DLM), Tyson Foods (NYSE:TSN), Food Technology Services (NASDAQ:VIFL), Whole Foods Markets (NASDAQ:WFMI), Cracker Barrel Old Country (NASDAQ:CBRL), and Diamond Foods (NASDAQ:DMND).

Canadian financials

Canadian financial stocks are due to join any market revival. The sector flushing has left no country unaffected, but Canadian institutions should be poised for some relative performance gains if the current market rally has legs. The iShares S&P/TSX Financials ETF (TSX:XFN) is Stock Trends Weak Bearish and is in our watch. The share price ($15.47) is rapping the resistance overhead that dates back to mid-February.

An important component of the S&P/TSX Financials Index is Manulife Financial (TSX:MFC) – it has shown some prospect of battling out of its bearish trend in recent weeks, although the stock is still Stock Trends Bearish. MF will be an significant signal toward a qualified turn in the TSX’s financial sector. Clearance through the 13-week moving average trend line should allow the stock to regain the $20 level. Look for MF to turn Stock Trends Weak Bearish soon.

Encouraging trend signals

The March rally has moved many stocks into areas above downside resistance, an encouraging prospect for the bottoming out process. Stock Trends monitors for price movements above the secondary trend and categorizes these as Weak Bearish. Currently, 47% of trending stocks on the NYSE are Weak Bearish – See the Stock Trends NYSE Trend Distribution table and graph. The Stock Trends Picks of the Week filter focuses on these breakout opportunities, where price momentum pulls the stock out of a long-term bearish trend. If the market continues to rally, these stocks will be primary drivers.

Nvidia chipper

Thinking about the potential for Nvidia’s Ion and inexpensive Nettops and Netbooks? Nvidia Corp. (NASDAQ:NVDA) is a current Stock Trends Pick of the Wick selection. It has rallied with the rest of the tech stable, and is primed to move past $12. Trading volume has been consistently strong over the past month. The coming trading sessions will tell us a lot about the prospect of NVDA and a developing bullish trend. Support along the trend lines suggests continued price momentum. Stock Trends Bullish Crossover approaching.

Stock Trends TSX Portfolio out of hibernation

A sign of the improving trend picture for the TSX is renewed activity in the Stock Trends TSX Portfolio. There are two new buys currently, the first since February. The bear market put the lid on trades for this trend following system. There have only been 20 trades from the summer of 2007 until these most recent buys.

Big Blue due

Two elder statesmen of computing technology are lead performers of the Dow Jones Industrial Index in 2009. International Business Machines (NYSE:IBM) and Intel (NASDAQ:INTC) show the most aggressive price momentum going into Q2. IBM has outperformed the S&P 500 by 29% in the past 13-weeks, as it closed above $100 for the first time since early October. Look for this favourite tech blue chip to continue its move through to $110, as the price momentum is sustained.

Signs of spring - RONA, Canadian Tire, Home Depot, Lowes

Investors can be encouraged by the movement of home improvement retail stocks. A key to economic recovery is the housing sector, and certainly the performance of stocks like Home Depot (NYSE:HD) and Lowes Cos. (NYSE:LOW) reflects the sentiment that consumers have regarding their primary assets. Both HD and LOW have rallied nicely off their March bottom along with the rest of the market. They are Stock Trends Weak Bearish and now serve investors a key trigger for a bullish trade as they challenge overhead resistance. Should these stocks advance through resistance in the coming weeks look for a continued rally in these important retail stocks.

Canadians can also look to Canadian Tire (TSX:CTC.A) and RONA Inc. (TSX:RON), also Stock Trends Weak Bearish. RON is a current Stock Trends Picks of the Week.

Mining stocks pulling a load

The top two performing TSX blue chip stocks in the past three months are First Quantum Minerals (TSX:FM) and Inmet Mining (TSX:IMN). The mining sector is up 45% over the period, and is helping lift the TSX into a promising technical area. The S&P/TSX Composite Index is now Stock Trends Weak Bearish and challenging the channel resistance area of 9,200.

Money management trading application

Too often investors come to the market table without proper money management training. They are keen to score, in hockey parlance, but not willing to backcheck. They are anxious to prove how smart they are, to bask in winning trades.  Not surprisingly, these unrealistic expectations set investors up for a rude awakening. How many times have investors misunderstood the probabilities that are stacked against them. Good traders know these odds and manage their trades to minimize losses. Always.

There is no shame in acknowledging the truth: no trader will be right all the time. In fact, even the best traders will be wrong more than they are right. More sobering is another truth: every active trader will have extended periods of crippling losses. These drawdowns on capital are the true test of a trading plan. How does your trading deal with inevitable drawdowns? Would your capital be wiped out if you suffered 10 consecutive losses? Would your trading tendencies change? What does your trading plan direct to minimize the dangers of extended drawdowns?

These questions should be on the mind of every self-directed investor. Before entering a trade know your probabilities – probability of success, probability of meeting profit targets, and the probability of variable losses. Indeed, if a trader learns how to work with these probabilities and devises a money management plan, trading can become a manageable business. And a successful one.

A good starting point is your own trading record. Keep track of your trades. Learn about the basic metrics of your trading strategy and find tools to help turn these metrics into a systematic trading plan. Stock Trends followers should be versed in this kind of systematic trading, but an even more rigorous methodology will be advanced by Stock Trends colleague Brian Ault, whose Fulcrum Shift Trading venture will lend a powerful introduction to his M3 Money Management Modeler – a powerful application the guides traders through the risk/reward analysis of position sizing.

Visit the Stock Trends Traders Network and follow some of Brian’s informative tutorials on the M3 Money Management Modeler. Stock Trends would like to direct our trading audience to this extremely helpful and powerful money management tool.