Oh What A Day

 

Since I overslept, I missed the opening of the market and with the recent but brief powers provided me by the incapacity of my wife and Chairman of the Board of the Cronin Family, I was not paying too much attention to the closing of the market. So let see what the heck happened.

 

Needless to say we went into the day still in a market correction (RED FLAG). So what caused two out of the three indexes to be in the green. As we said last night (actually early early this morning) a weak manufactures report and a shaky homebuilders report might rock the market. We got both but Mr. Market must be on his happy pills because he looked beyond both. Our guess is he was looking to China which teased signs they will do some quantitative easing. Without boring you with details, they are talking about loosening some of the reserve capital requirements on their banks. Remember (If you were following the blog back in 2010 and 2011) we explained that China was tightening the reserve capital requirements to slow down their hot economy. Well that worked and their economy is slowing. It appears to be a soft landing and Mr. Market liked the news about China so ignored the less than positive economic news here in the states. It's kinda like Lincoln ignoring that pain in the back of his head because the popcorn smells so good at the theater. ("Except for that President Lincoln, did you like the play?") Technology stocks (AAPL and PCLN) kept the Nasdaq in the dirt all day. Dare I say this could be a buying opp for AAPL? Dare I say it is a RED FLAG, but we are watching it close. Citi beat, but Mattel missed, not giving confidence for quarterly earnings. Gold fell but oil went up. Volume was about average, even slightly above.

 

Panning for Gold

 

Last night or early early this morning we told you about the Auer Fund strategy. (Quick reminder if your finger is too tired to look back. Qtr to qtr sales over 25%, qtr to qtr EPS over 20% and P/E below 12) Well that screen we talked about last night yielded 124 stocks that met the requirement. A lot of stocks to track.

 

We are going to use the screen and apply one more criteria to the mix. We are going to use the IBD composite rating of 80 or higher. Fortunately, we can use the an expensive subscription tool from IBD called MarketSmith which allows us to build the same screen adding the IBD as the last criteria. Once that is done, we have a list currently of 36 stocks that meet that criteria.

 

What we have managed to do is to cull a list from 8,000, to 165, to 124, to 36. From this refined list we can now look at good entry points and wait to pick the low hanging fruit. Here are a few to keep an eye on, we are:

 

AGU

 

Agrium Inc. engages in the retail of agricultural products and services worldwide. The company operates in three segments: Retail, Wholesale, and Advanced Technologies. The Retail segment supplies crop nutrients, including dry and liquid nitrogen, phosphate, potash, sulfur, and micronutrients; crop protection products, such as herbicide, fungicide, and insecticide products; seed products; merchandise products comprising wool, fencing, feed supplements, animal health products, and other products, such as irrigation equipment; and provides product application, agronomic, soil and petiole testing, and crop scouting services, as well as other services comprising wool sales and marketing, livestock auction, insurance, and real estate agency services.

 

This is missing a good entry point. The stock is just a hare off a 90.00 entry point from about a month ago, but I don't trust it. We will be waiting and ready to give this agricultural stock a play. We just ran this through the Buffet Valuation Worksheet and we got back a ten year annualized return of 65.50%. That is a record, and it is so high I had to run the numbers again.

 

Boys and Girls, this look like a real nice core opportunity. Tomorrow night we will be picking apart the 10K for any squishy numbers, but this look like a beauty.

 

AMOT

 

Allied Motion Technologies Inc. designs, manufactures, and sells motors, electronic motion controls, gearing, and optical encoder products worldwide.

 

This one is not as pretty as AGU, but it meets all the criteria. IBD gives it a rating of a respectable 92. We are not impressed and it did not pass the Buffet test.

 

BOFI

 

BofI Holding, Inc. operates as the holding company for BofI Federal Bank that provides various consumer and wholesale banking services primarily through the Internet in the United States.

 

Of course it meets all the criteria. IBD has it rated a 96. It also passes the Buffet Valuation test coming in at an annualized ten year return of 28.62%. It is trading one percent below a beautiful entry point of $17.56.

 

A little more homework on this one, but it looks very interesting.

 

So there you have it. It looks like this Auer Fund strategy is complimentary to the CAN SLIM strategy. We will have more of them for you tomorrow.