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Last Monday’s New America article profiled Indian Bank HDB, which I thought was interesting because I had just discussed the bank in Sunday’s IBD 50 Analysis. The article told the story of the bank’s incredible growth in recent years and how it projects to continue that growth rate in the future. Since we all know that earnings and sales growth is what drives stock price, this is the type of stock we look for. The article goes on to discuss how HDB is a leading bank in terms of profitability, growth and balance sheet.
HDB broke out of its Flat Base on slightly below average volume this week. We could make the case that volume was only light because of the holiday, especially since the daily volume was61% above average when it broke out on Wednesday. This puts the stock in buy range after a strong breakout from a first stage base in a market that just delivered a Follow-Through Day. This could be a good stock to test the waters with in the new uptrend. It is also worth noting that the stock’s RS Line is at a new high.
I bought it today at 42.39. Rough start. 7% stop is in at 39.42.
i bought at 40.77. Put in 50% of my allocation for this equity. Let's see if the run continues. With today's distribution on the NYSE looks like we'll need to play tight unless the markets can shake it off.
I also bought a pretty light position. Felt obligated to "buy something" on account of the FTD.
Yep, exactly the same reason for getting in. Not to impressed with todays action, both on this stock and the market in general.
Andrew and Stephen, HDB was on my short ready list as well, but the FTD call caught me off guard, and by Monday when I was re-evaluating we suffered distribution which kept me out of re-entering "on, or as shortly after, the FTD as possible" as per WON's guidance. Of'course it is now extended past +5% from the buy point. I do hae a question for you both--two negatives for this tock (IMHO) are decelerarting earnings and sales (both <25%) and decelerating fund ownership in recent quarters. How do these "issues" affect the appeal of this stock for you? Thanks. Brad. BTW, I enjoy your site Andrew and have shared it with our local IBD group.
bjrad, I think you are dead on with the decelerating earnings, sales, and fund ownership. I actually wrote in a longer post on my site that for some reason I allowed myself to overlook that because I was excited that they had posted 8 straight quarters of blue numbers. I have no idea why I fell into that line of thinking because we all know that that is insignificant.
For the record, I am still thinking this was probably a poor decision even though it is bouncing back on volume right now.
bjrad. WON's book say alway get back In on the FTD. There were a few decent candidate on the FTD and this one was closest to the buy point and was showing good strength. Nicolas Davas book he says if the volume is there it can outweigh the fundamentals. I did consider the earnings and sales, but it had good technicals. I think this will be tough to hold as it seems very unpredictable.
Stephen & Andrew, Absolutely, WON stresses always buying something on the FTD, or as shortly thereafter as possible, as the best money is made the earlier you get into a move. As I said above, this FTD completely caught me off guard. I think it was just the holiday week, odd volumes, and options expiry, as well as, my sense that the market was just weak and wobbly, that caused me to not re-enter immediately. I'm regretting it now as I am finding it difficult to find something I want to buy. You are spot on re: volume, Stephen. Andrew, enjoyed your coverage of "Square-Box" bases--tough to pick out in real-time. Re: HDB, the three down days--closing in the bottom of the spread on high volume, after this move up makes me nervous--looks like churning to me. Just my impression. I look forward to hearing others thoughts.
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