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The ''60s cult television comedy “Get Smart” is being revived again. It’s set for a second big screen appearance this summer. What’s that have to do with our daily market show? Not much, except the brainier female sidekick Agent 99 does sport the double-nine’s associated with investing excellence per Investor’s Business Daily and how, in effect, trader’s “get smart.”

The 99s at “IBD” represent both earnings quality and technical relative strength versus the universe of listed equities here in the US. Based on this system, traders typically begin the process of separating the wheat from the chaff by only looking at stocks that have combined ratings of 80 / 80. Hence, the crème de la crème sport the coveted 99 / 99.

If life were only so simple that traders needed to do little more than purchase top-ranked doubles. That would be nice of course, but “R.I.F.” or “reading is fundamental,” is only part of the equation. Traders dedicated to this investment philosophy also look to confirm those numbers with proper base structures, as well as a broader market backing up those bullish formations by being in a “confirmed rally,” courtesy of the follow-through day or “FTD” signal.

Lo and behold, the broader market did just such a service for growth bulls last Thursday, as the Dow Industrials (DIA) scored an FTD. As such, coupled with a few proper bases in development and a few highly-ranked issues floating around in cyberspace and in print, I’d like to look at a couple of ways in which trader’s might stand to “get smart” by watching something other than the boob tube.  

Figure 1: Koppers Holdings (KOP) Weekly

Formerly known as KI Hldgs, Koppers (KOP) is a recent IPO from 2007 specializing in carbon compounds and wood treatment products to markets around the globe. The stock maintains an EPS Rating of 99, sports a Relative Strength Rating of 96 and is currently ranked no. 15 on the IBD 100.

Technically, shares of KOP have been cooperating very well for reversal strategists the last several weeks. While many other highly-ranked stocks collapsed prior to the last week’s newest bull signal, KOP managed to keep traders focused on patterns like the Fib-based Gartley and W4 / Bollinger plays fairly happy. For details on those reversals, recent Hot Shots articles have discussed the former, while Jordan Craw’s “Elliott Wave: Bollinger Confirmations” looks similarly well-suited to the recent bottom and successful reversal.

In the here and now, another pattern taking shape is the weekly “W” or high-level double bottom. The last couple of weeks have been spent forming a handle-on-handle consolidation around the mid pivot or prior “C” point from the Gartley low. The first potential breakout above 44.51 (Dec 07 highs + .10) didn’t go too well with an immediate lower volume breakdown of the pivot. However, with an “FTD” now watching its back, it’s not time to call the authorities for bad behavior in KOP just yet.

Figure 2: Mobile Telesys (MBT) Weekly W4 / Bollinger

Did I say something about the “boob tube” earlier? Seeing how I did, I’d like to pitch an even more “Mad Money” idea from a guy that likely has way too many bullish epiphanies to seriously be doing the proverbial homework. I’m referring of course to none other than Dr. Cramer. Above, we’re looking at one recent “Must Buy!” call-to-arms from late last month courtesy of Mobile Telesys (MBT).

MBT no longer maintains a place on the IBD 100 and doesn’t sport the 99’s. However, a 96 EPS Rating still places it in front of 96% of the universe of stocks known to IBD as it relates to its growth prospects. In Jimmy’s universe, shares of MBT also rank higher than recently dismissed Russian wireless peer Vimpel (VIP), which still maintains an EPS of 99. That said, back in late February Mad Money was making sure Cramerica was dialed in to Mobile Telesys’ superior market share, 1.8% dividend yield and its 13x earnings multiple versus its 17% long-term growth rate.    

That was then and near $86 a share. Meanwhile, investors just getting smart to the prospects of MBT can do so for about a “Monbackie!” of nine points around $75. Traders of course need to do the homework, but I’m pretty sure those numbers translate into further value. Of course revisions to the numbers can always be made to the downside. Further, it would be nice if the Russians did a slightly better job with earnings disclosures, which might serve as an additional caveat and not caviar for bulls looking to nibble. Nonetheless, that’s where possibly the use of the charting tea leaves might come in handy, along with some limited risk options espoused as “too risky” by the same After Hours promoter of bull.

As for what the technicals are saying at $75? The observation is a weekly double-bottom undercut pattern is in progress. In conjunction with the fore-mentioned “Elliott / Bollinger” trigger from the KOP analysis, less-mad money operators might be looking to roll up the sleeves, do the homework and make a call in MBT of their very own.

Chris Tyler
Staff Writer & Options Strategist
Optionetics.com ~ Your Options Education Site
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The information offered here is based upon Christopher Tyler’s observations and strictly intended for educational purposes only, the use of which is the responsibility of the individual. 

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