Salesforce.com (CRM)

Last night CRM beat estimates on both the top and bottom lines. The beat wasn't exceptional and forward guidance wasn't raised significantly. But what matters is the market's reaction. Price has gapped off its 10 MA weekly and vaulted on massive volume to fresh 52 week highs.

CRM has been posting double digit sales and double and triple digit EPS gains on a year over year basis for at least eight quarters and that is forecasted to continue.

This morning price has taken out the early gap up highs signalling that shares are likely to only go higher during a continued market uptrend. We would recommend entry at the market (where price is currently trading around $53).

Your stop should be the day's low. But given CRM's performance thus far we think this has an excellent chance of resuming a powerful run.

This morning on our sister blog we published the reasons why, surprisingly, you need to begin to reinvest. We recommend reentry in BIDU, AAPL, WMS and STEC. While market leadership has narrowed we are monitoring reentry in other prospects and are considering some new names as well.

Over the weekend we advised caution. Today should find you out of the market in the safety of cash. See our companion site for our take. We'll be posting new trading opportunities, long or short, as they arise.

Updates on Stocks in our Universe

While today's market posture doesn't encourage fresh entries it does require us to manage our longs. Of late we've posted updates on GMCR, NTES and CSTR. Look for them under the Comments section of the original write up.

The Punchbowl is Empty for Those Late to the Party

If we must say so ourselves we’ve hit the ball out of the park in the brief time this blog has been in existence. With few exceptions our picks have been exceptional gainers.

But that doesn’t make us geniuses. What it makes us is pretty good at timing the market and picking stocks well positioned to move aggressively higher with the market when it makes its move. We could make picks using the same criteria when the market has another posture and be spectacularly mediocre or even unsuccessful.

This is why the number of recommendations we have made of late have been few. Of note the only one we made last week, Neutral Tandem (TNDM), was a dismal failure. Let’s take a look at some reasons why.

Most people will immediately turn to the chart and in retrospect point to a number of factors that doomed it. But we’ve seen “faulty” patterns work often enough in the past to dismiss these objections.

Others will point to a management that suddenly has a more cautious outlook. But Apple (AAPL) management is consistently cautious in their guidance and that hasn’t stopped that stock from being one of the largest winners of the past half decade.

We think that TNDM was unsuccessful because it was late to the party. It’s that simple. The market resumed its uptrend in mid July and immediately a number of stocks, including many that we profiled, started to launch higher on volume out of their patterns. Many quickly gained 15, 20, even 40% in the case of STEC. And TNDM? It sat there not doing much.

When the market is moving and a stock isn’t moving with it that makes the stock a laggard. While it could well launch on a big run the odds are lessened. True leaders assert themselves soon after the market turns itself loose.

This is why we are reticent to profile other stocks at the moment. For now your best chances of investing success are to watch those stocks that have made good moves and patiently await an opportunity to climb on board. That seems counterintuitive but historically those stocks that move late tend to be lesser stars and we are after only the true leaders.

We’ll be following all of our stocks and making suggestions for alternative entries in the Comments section underneath each write up.

Some Thoughts on the Impact of Stock Offerings in Your Holdings

This morning GMCR priced a primary offering of 5MM shares at $67.25, a discount of less than 1% from last night's close. Thus far today the stock has only traded higher. That kind of enthusiasm for an offering is exactly what we want to see in one of our positions.

Juxtapose this reception to the horrid reaction to STEC's secondary offering yesterday. (A secondary offering is when locked up shares are sold as opposed to a primary where fresh shares are brought to market. The primary is dilutive. The secondary increases the float but doesn't dilute.) In spite of not brining any new shares to market investors bailed on the stock. Underwriters had to price the offering nearly 8% below the previous closing price. The lack of institutional support for a winning stock is a cautionary sign.

Clearly the market has been disturbed by STEC’s not raising forward estimates and the selling of large shares by insiders. We don’t think STEC’s fundamental outlook has changed and believe the uptrend could well be saved. But we felt compelled to take some profits in the name yesterday.

We are prepared to add back provided we see a convincing turn in the stock. This morning STEC gapped higher with the market but then traded below yesterday’s low. It has found support at the July 16th gap fill. Whether it can mount a convincing turn here or will trade back towards its 50 MA remains to be seen. We’ll be monitoring the action and post further recommendations under our write up of the stock.

We Blew It On Coinstar (CSTR)

CSTR is in flight. We clearly missed at least a terrific trading opportunity. We have posted complete analysis of the quarter and suggestions on how to approach this stock going forward in the "Comments" section underneath our write up of the stock.