...Long/Short positions for the current quarter (complete and active)

Previous picks still in play with updated trade management criteria:

- Profitable Trade:  sell at 1/2 position at 1st target sell point (usually at buy point +5 percent) to ensure profitability; hold 2nd half of position until 2-day trailing stop (minimum low of prior two days) or appropriate technical stop is hit (stops adjusted daily);

- Loss Trade:  sell 1/2 position at technical stop-loss point, then the 2nd 1/2 at the 7.5 percent max-loss point (stops not adjusted daily);

- Mixed Results Trade (sell first 1/2 position at loss & second 1/2 at profit):  sell first 1/2 position at initial technical stop-loss point, then after second 1/2 position becomes profitable sell when appropriate technical stop is hit (stops adjusted daily).

These fundamentally sound stocks need room to run. Often they pullback to hit the 1st stop-loss point only to reverse and move much higher. This trade management strategy keeps one in the bullish trade and limits the downside to less than a 7.5 percent loss.

Trade Management Criteria for Recommended Trades

TODAY'S TSM SET UPS

...TSM longs and shorts meeting technical criteria for next day

Note, I don't make every one of these trades myself, though I do make many. Trade results are hypothetical. Think of TSM results as what's possible from these forecasts. Note, it's highly unlikely that you (or I) will consistently match these results (because you would have to be sitting in front of a computer screen all day long while the market's open.  Having said that, I do actively trade TSM screened and forecasted stocks for my own accounts (folios & TradeStation).

Here are stock(s) I'm interested in for tomorrow : 

APOL-- Apollo Group, Inc.-- Long

Company Profile:  Apollo Group, Inc., through its subsidiaries, provides various educational programs and services at high school, college, and graduate levels. Its subsidiaries include The University of Phoenix, Inc. (University of Phoenix), Institute for Professional Development (IPD), The College for Financial Planning Institutes Corporation (CFP), Western International University, Inc. (Western International University), Insight Schools, Inc. (Insight Schools), Apollo Global, Inc. (Apollo Global), and Meritus University (Meritus). University of Phoenix offers associate�s, bachelor�s, master�s, and doctoral degree programs in arts and sciences, business and management, criminal justice, education, human services, health care, technology, and communication at campuses and learning centers in 39 states and the District of Columbia, Puerto Rico, Canada, Mexico, and the Netherlands, as well as through online educational delivery system. IPD provides program development and management consulting services, including degree program design, curriculum development, market research, student recruitment, accounting, and administrative services to private colleges and universities in 21 states. CFP provides financial planning education programs, including the certified financial planner professional education program certification, and certification programs in retirement, asset management, and other financial planning areas. Western International University offers undergraduate and graduate degree programs at Arizona campus locations, online, and also through various joint educational agreements in China and India. Insight Schools offers curriculum and administrative services to public schools to operate full-time online high school programs in 10 states. Apollo Global focuses on the provision of education services. Meritus provides degree programs online to working professionals in Canada and internationally. The company was founded in 1973 and is headquartered in Phoenix, Arizona

Company Fundamentals: APOL is a 11.7 billion market cap company. Its sector is Diversified Services.  Zacks ranks APOL a 1 (ranked 1 four weeks  ago). PEG ratios of 0.81 and 1.04 for the next two years reflect the value left in the price (read about the effectiveness of PEG ratios in forecasting value here), though it has increased 40.8 percent in value over the past six months (S&P 500 decreased -35.8 percent). APOL reports earnings on 1/06/09. It is a member of three of the seven TSM fundamentals screens but not a member of a Zacks earnings revision screen.  Over the past two quarters, it has averaged a 9.8 percent earnings surprise and produced a "26 -7 13 25" (least-to-most recent quarter) percent year-over-year earnings growth and "17 14 14 16" (most recent quarter) percent year-over-year sales growth (producing 3.65 billion in sales this year).  Its Price/Sales ratio now stands at 3.20, and it's currently trading at 92 percent of its 52-week high. Further, this year's earnings estimates have increased their numbers by 5.4 percent from 3.32 to 3.50 in the past 90 days. 

Technicals:  APOL has been consolidating over the past month at the support of its rising 20-day moving average.  I like this industry in that it seems to prosper in a down economy as more people retrain.  You can see that below in their relative performance over the last 5 years.  The colored bars mark long-term trends.

This week's TSM picks meet the Rule #1 Criteria (MOS price in parenthesis):  FLIR(13.86), GPN(51.73), PETS(593.1), VAR(49.34)

Phil Town's Rule #1 : I introduce here, Phil Town's Rule #1 criteria for each TSM pick.  The analysis, described in his best selling book, evaluates the long-term potential for a given stock.  Of course, the average TSM pick plays out over the next six days (most times sooner).  I insist on the TSM fundamentals screens (all long-term based utilizing a combination of IBD, Zacks, Vector Vest and Navelier criteria) because they identify those stocks with quality fundamentals (including short-term PEG ratios add a value metric), and these are the ones that institutions buy (providing us short-term traders a safety net).  Note, a 10-year projected EPS (estimated from historic growth rates) combined with a P/E estimate allows one to calculate stock price expected in 10 yrs.  That future price in turn can be combined with an assumed IRR rate of growth (Town's 15%) calculation to estimate what today's price should be (sticker price).  Town then recommends buying at half that price (MOS - Margin of Safety).  Note, I use an Excel program to qualify TSM stocks that was developed by Jerry Erwin. It automatically pulls data from free internet sites and populates an Excel sheet, but beware the calculations are only as good as the free data provided by moneycentral.msn.com.  If you would like to purchase your own copy of the program, contact Jerry.

Trader's Corner

...TSM Education Center

TSM METHOD RESULTS

...TSM  forecasting results for past 17 quarters 2003-2008

 Find a summary of the results generated from the 1826 TSM forecasted
from the last 20 quarters 2003(4th Qrt) through 2008 (3rd Qrt) here.

TSM Trading Returns have been summarized for the 3rd quarter of 2008, as well as totals for the last 20 quarters.  In summary, a $35,000 account at the end of the 3rd quarter in 2003 would have grown to $308,778 over the next 20 quarters (a 782% return over a period the S&P returned 15.3%).  On a quarterly basis, the TSM trades (averaging 103 half-position trades) returned 11.9% quarterly, the S&P 1.0%.  Only one of the 20 quarters did the S&P outperform the TSM trading returns.  This last quarter (3rd quarter 2008)  produced 74.1% winning trades.  Obviously, short-term trading based on techno-fundamentals has worked well. 

WEEKLY TSM PICKS