"Confirmatory Analysis" is a stock selection methodology that combines strong technicals with stellar fundamentals. In my case, technicals always come first and will often suffice in and of itself for a reason to buy or sell a stock. When fundamentals kick in, the trade becomes compelling. Since there are usually more technical-based trades then capital to trade them all, requiring the kicker of fundamental confirmation serves as a filter to reduce the array of attractive set-ups to a manageable level.
I bought GSI on Friday near the close, even though the general market looks sick and we are headed into a holiday week. But the trade became compelling around mid-session when I pulled up the GSI chart and realized that it was about to break out of a six month pattern:
The annotations on this chart give a clue as to why I like GSI here;
- It is breaking out of a nine month long horizontal trend channel (lower channel line not shown).
- The break out is accompanied by a huge volume bar;
- The MACD oscillator is showing building upward momentum.
Now the truth is that I bought GSI just on the break out. I didn't have time to check out the fundamentals on the stock at the time, but, GSI has been a stock I have been day trading for months, because when it runs it really runs and it has been easy to scalp 5% under the right trading conditions.
The fundamentals that I usually look for in a stock will vary with each individual security and sector. I've highlighted a few in prior blogs that have shown to be good indications of future price movement. I especially like Revenue Growth and Earnings Growth and those are easily available on Yahoo Finance.
But by now you should know that I absolutely love a good story stock. A good story will get under the skin of a trader/investor and completely take over those areas of our brains that control rationality and allowing total domination by and for the area of our brains that control greed and yes, dreams. It may sound risky, but, remember the late 1990's when this chemical or biological process became epidemic, causing fortunes to be made (and then lost, but that story is for another blog).
GSI is a Chinese stock and that is itself a story. It is also a Louis Navellier stock and in order to be a Navellier stock it by definition must have stellar fundamentals as well as a compelling story (as only Louis can tell it) behind it. Now we've made good money on the last two Navellier stocks, GTE + 12% in two weeks and FSYS +4% in one week.
Here is Louis' "Portfolio Grader" for these three stocks:
As you can see, according to the way Louis Navellier looks at fundamentals, GSI (as well as GTE and FSYS) is very highly rated. But wait, there is more.
Nobody writes a story better then the copywriters who work at Navellier's publisher. So I will end this rather lengthy blog with their hook, the story behind GSI and why if you don't own it yet, not to worry, you haven't missed out because as you will read, the best is yet to come.
Did You Miss It?
- UP 80% in 4 weeks
- Then UP ANOTHER 32% in 4 DAYS
- Now UP 53% in 7 DAYS!
Can You Get in Now?
EMERGING GROWTH'S NEW APPLE!
Big winners are our meat and drink to us here at Emerging Growth.
Trophy stocks we call them, miracle stocks, stocks that defy the
Gravitational pull of the market and blast off for the
moon...leaving most OTHER investors gazing skyward wondering...
HOW DID I MISS THAT?
I'm Louis Navellier and I'm writing to you today to tell you: you
haven't missed it yet, but if you're going to buy this monster
winner, buy it in the next 72 hours.
On January 2, Emerging Growth subscribers, acting upon my
instructions, sent privately via email, loaded up the best
example of this new type of China stock.
* In the previous 4 quarters, sales growth rose 555.8%
* Earnings rose 1,830% in the same period
* Operating margins nearly tripled.
We bought at $7.90.
Today, with the stock near $14, we are closing in our FIRST
The first, I believe, of several.
What It Does
China produces one-third of the world's steel, but domestic
demand is even greater. That's why steel prices are going higher
and higher. Indeed, even though raw material prices (coal,
transportation) are up now, steel prices are up even more,
allowing our company to expand its margins.
This producer has three other big advantages:
- because it's not owned by Beijing like the other China steel
behemoths, it can price nimbly and change its mix of output in
- it owns ore mines, so it controls raw material costs. The ore
mines Rio Tinto and BHP Billiton are gouging China's state-owned
steel producers, but this company is largely immune.
- it is gobbling up other small steel producers who are struggling
with increased costs, thereby making itself more efficient every
- it serves a niche: hot-rolled sheet steel used in agricultural
equipment, shipping containers and big construction projects like
Olympics stadiums. It is closely involved in the rebuilding of
Sechuan after the recent earthquake. In every niche, it controls
up to 70% of the market share.
If my information is correct, we have 72 hours to act. Here is
One of the world's richest men wants to buy our little
independent China steel company.
In the last year, Lakshmi Mittal has built steel mills in Saudi
Arabia and Poland, created Mexico's largest steel conglomerate,
wrung mining concessions out of Senegal and bought a distribution
network in Germany. Turkey, Mozambique, Italy and Estonia have
also been sucked into the Arcelor Mittal mill.
Just in the last year.
But the jewel in Mittal's global crown is China. And his prime
target is a small, well-run, independent steel mill-of which ours
is the best.
The trigger for an offer comes as the second quarter ends. That's
when market share is declared and speculation about consolidation
will run wild.
Many will buy on the rumor (as the saying goes) forcing our stock
up 20%, 30% or more during the July 4 weekend.
Get in BEFORE this happens.