Fast-Moving Stocks for Your Radar Screen

 | Oct 07, 2011 | 5:00 PM EDT
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As I scan charts every day, one of the characteristics I look for is a heavy-volume price move out of a consolidation.

Substantial buying on the upside is a reliable technical signal that institutions are piling into a stock. The SPDR S&P 500 (SPY), which tracks the benchmark index, had advanced 2.4% for the week as of mid-session on Friday.

Some of the most heavily weighted S&P 500 names were moving in less-than-inspirational volume. Exxon Mobil's (XOM) gains came in lower-than-average weekly trade, as did IBM's (IBM) and Microsoft's (MSFT). Apple (AAPL), meanwhile, bobbed around within a narrow range after Steve Jobs' death. However, the modest downside price action came in above-average trading volume.

Drilling down to smaller holdings within the SPY -- those that tend to get less headline attention -- Biogen Idec (BIIB) has been rallying out of its consolidation in fast trade. After getting support above its 200-day line recently, the stock continues to hit resistance around $100. It's trading about 10% off its June all-time high of $109.63.

In addition to tracking higher with the broader market, Biogen Idec had some company-specific news that may have spurred some buying. On Wednesday, data from clinical trials showed no new safety concerns over the company's experimental multiple sclerosis drug BG-12.

Analysts expect earnings of $5.87 per share for the year, up 14% from 2010. The company is expected to report its third quarter on or around Oct. 25.

Another fast mover for the week has been clothing maker VF Corp. (VFC). As of Friday, the stock was flirting with its all-time high of $132.82, reached on Sept. 27. Earlier in the week, volume came in above average on Tuesday, as the stock bounced off its 50-day line along with the general market rally.

There's another interesting technical element to note about VF. In early June, the stock fell to $91.60, which undercut the March low of its previous price consolidation. That selling action is often a precursor to further gains, as traders and investors lacking in conviction have been flushed out and new buyers grab shares at a lower price. In fact, the stock has gained 42% since that June low.

The company owns several popular brands, including Seven For All Mankind, Vans, The North Face and Nautica. VF has built its brand portfolio through acquisition, and the company tends to operate each line as a stand-alone unit, a factor analysts say has contributed to the firm's success.  

VF is due to report its third quarter on Oct. 24. Analysts are eyeing income of $2.56 per share on sales of $2.61 billion. Those would mark year-over-year increases of 15% and 18%, respectively. Free cash flow, which can be an indication that company is healthy and poised for growth, increased in 2009 and 2010. The company also boasts a good return on equity, 19%.

While the fundamentals and technicals indicate that VF could be set for increases, my usual caveat comes into play here: While market swings are still a big risk due to a number of possible developments worldwide, it may be wise to track the stock and wait for the next buying opportunity on a pullback.

Monsanto (MON), another benchmark index component, is also attempting to work its way out of a consolidation, and it may be another one to track.

The stock has generally been a laggard, but it may be showing some early signs of a turnaround.

The company's earnings performance has been erratic recently, although analysts do expect a gain of 17% for fiscal 2012, to $3.42 per share. For 2013, earnings are pegged at $3.94 per share, an increase of 15%.

Shares bolted the week ended Oct. 7 not only with the market, but on fourth-quarter report that yielded a loss, but came in ahead of Wall Street views. Revenue beat expectations. The company said it would restate earnings for the past two years but said that would not affect its growth targets for the coming years.

The stock's 50-day line crossed below its 200-day line late last month, a bearish sign. However, if Monsanto continues working its way higher out of its current consolidation, watch for those price lines to trade places. The key indicator I'm eyeing at this juncture, though, is heavy upside volume. The stock notched four days in a row of gains in fast trade, a positive signal.

Monsanto is a name to watch along with other agriculture-related stocks that are expected to show price appreciation as demand for greater food production increases worldwide.

Columnist Conversations

I reached out last week to my close friend Ken Shreve, who is a prominent writer for the IBD.  I asked Ke...
I reached out last week to my close friend Ken Shreve, who is a prominent writer for the IBD.  I asked Ke...
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