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Hello out there stock trading fans. Just back from Las Vegas and the Money Show. I must say, I was a little
disappointed as they didn’t “show me the money”.
Anyway on Tuesday’s little update regarding going through the descending fan line or resistance line on the
NASDAQ… I mentioned to look for power and surging volume as we moved through this line. Even though we
went through the line, there was no power or convection. Only a few stocks participated which were basically
the engine stocks. Thursday, we had more of the same lack luster action and we even had some extreme
speculation still evident as there were a couple of stocks going from $2 to $7 or $8 in one day.
Friday’s tech sell off on the announcement of Hewlett Packard’s poor earnings sent the market averages
down along with double witching expiration. This closed the NASDAQ on the lows for the day and below it’s
four-month rising trend line. The Dow closed near its rising trend line and could follow suit any day or it
could lag for awhile then play catch-up. Monday could be quite interesting.
I would like to sum up a few other notes on the market’s health before I get to some good stocks that I see.
Institutional cash levels are at a very low point at this time with only 41/2% percent cash. This is an area that
usually shows exhaustion of buying power. When cash levels are at the 7% to 12% level you have good
buying power to move the market. As you all know, the advance decline line is continuing to deteriorate as
well as narrow leadership.
Maybe we will correct for our usual 10% or so and rest for 10 weeks and then maybe we can get underway
for the balance of the summer.
Below I will give you some stocks that are looking very good based on earnings growth, chart patterns, group
strength and relatively small number of shares outstanding or oat. I do however urge caution here in buying
stocks at this time, as the risk level in the market is still quite high. If you chose to buy any stock(s) at this
time, weather it’s one of my listed stocks or one that you found, please be sure that you cut you losses at no
more than 5 to 7%.
In addition to last weeks stocks which are still looking good and making some progress here are some new
prospects.
Agribiotech Inc. (ABTX) - $18

20 million shares on the oat and 25 million shares total. Stock has just made a nice move on the release of earnings last
week. Looks to make a cup and handle formations here. May have to wait a few weeks for the pattern to nish setting up.
Keep a close eye on it. Buy point is $19.75. Earnings up 150% to 15 cents a share and revenue up 275% to 75 million for the
quarter.
Arterial Vascular (AVEI) - $35

35 million shares on the oat and earnings are huge at 67cents a shares on the last quarter. Up 857% and revenue up 592%.
I gave this one to you after the release of earnings with a buy point of $43. Stock did not hit the buy point and sold off of
good earnings as did many other stocks this last earnings season. Stock looks to have bottomed here and looks to turn up to
40, but may encounter the descending 50 day moving average line at $37 and return to $35. Wait for the stock to make
further basing action before entering.
Cutter & Buck (CBUK) - $27

4.2 million shares oat and stock has a high tight consolidation of 10 weeks of no more than 3 points in this time frame.
Apparel and retail are a hot group now and this company’s last quarter earnings are up 100% to 12 cents. Which is a weak
quarter for this company. Stock is set to move any day now so keep your eyes peeled. Buy point is $28.50 and not before
then.
Deb Shops (DEBS) - $9

3.2 million shares oat. P/E of 18 and this company just posted earnings of 46 cents. That’s right .46 cents. Up 171% but on
small revenue gains of 10%. Company owns 275 apparel stores. Again, apparel is hot as well as the textile group. May have to
wait awhile for the stock to rest as it has already moved out of the base.
Headway Corp. Resources (HDWY) - $11

8.9 million shares total. I gave this one to you two weeks ago at $9 and said that this stock was going to move and the
market loves stocks in this type of group which is human resources staf ng to the nancial industries. Buy point is gone so
don’t touch now. Wait for the stock to set up again. Could be around for a long time. Revenues for the quarter are up 161% to
57 million and earnings are up 40% to .14 cents.
KTI Inc. (KTIE) - $20

8.4 million shares outstanding. Earnings up 55% to .31 cents per share this last quarter. Revenues up 104% to 37 million.
Stock is set to move Monday. Buy point is $20.50 and not until it crosses this mark.
Oshkosh Truck Corp. (OTRKB) - $24

6.8 million shares oat. P/E15. Company just announced earnings up 71% to .48 cents a share. Revenues up 28% to $217
million. Stock shot out of the base 5 points and now has consolidated for 5 days. Stock looks to rotate and move up another
5 points any day now. Buy point is $25.25 and not before then and not past $26. Company also announced it acquired
another company which will add $327 million dollars to annual revenues. This stock could be with us for awhile.
Well folks, I would like to give you 10 more stocks or so, but as I scan through my data base I am astounded
as to how many stocks are closing below the 50 day moving average line. As you may or may not know this
can be an area where many people will sell their positions. This will put additional pressure on these stocks
and thereby pushing them down. This will in turn push down the averages which will in turn start heavy
selling as the average cross various other moving average lines and create a series of lower lows and lower
highs in the averages until we can nd a oor in the overall market.
Remember to never buy a stock more than 5% past the buy point that I give you and to cut your losses fast to
no more than 5 to 7 percent of your entry point. And may I suggest that if you wish to buy stocks here, that
because of the present market conditions to limit the amount of money that you are willing to commit to
maybe just 30% of your buying power and not to be on margin at this time.
If you know anyone that would like to be on my list, please send me their e-mail address so I may include
them on my mailing list.
Thank you,
Dan Zanger
Dan@ChartPattern.com

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