Zacks' $100K Challenge 2007 Top Player Interview features Edac Technologies, FalconStor, Chindex International and Methanex Corp

Business Wire, Nov 1, 2007

CHICAGO -- Zacks.com introduces its $100K Challenge 2007 top player interviews, which feature insights from the leaders of the Zacks Simulator game. This year the Simulator's $100K Challenge allows investors to prove their stock picking abilities by competing directly against other players for a possible $100,000 contract with Zacks.

Studious of up-trends in stocks with the potential to keep going higher, Don Dreyer (DreyerD) looks for breakout momentum plays with high profitability. As a technical analyst, he considers fundamentals before making a trade, and avoids the volatility of breakout plays thusly: "When the best stocks of the past month take a breather and the volatility dies down, I look to enter. This allows me to select a stop price that isn't going to be violated by any excessive volatility."

Highlights from the October 31 interview include:

What specifically do you look for in a stock before purchasing it?

I have mentioned in a previous interview that I am a technical analyst when it comes to assessing stocks. If great chart patterns abound, I lean heavily toward the ones that have better fundamentals.

There are a number of things that finally get me to take the plunge on an individual stock. To begin with, I want stocks that set up with what Van Tharp calls a "high-profitability" set up. The stock has to have dramatically outsized potential relative to risk. I am willing to get stopped out of trades frequently if I have regular huge winners. It is an added bonus if the stock also sets up with a high probability to work in my favor.

To find stocks that have high profitability, I look at those with the highest relative strength compared to the market for the past month. After rocketing into solid up-trends, these stocks have great potential to consolidate briefly and keep on going. My philosophy is to "buy it when it's quiet." When the best stocks of the past month take a breather and the volatility dies down, I look to enter. This allows me to select a stop price that isn't going to be violated by any excessive volatility.

I like stocks that break above the 50-day moving average and slide above it like Edac Technologies (Nasdaq: EDAC) recently did. When the moving average is tested from above and holds firm, it is a "tell" that this trade is going to resolve higher. I also like stocks that form pennant or flag consolidations after a big move, like FalconStor (Nasdaq: FALC), Chindex International (Nasdaq: CHDX) or Methanex Corp. (Nasdaq: MEOH).

The $100K Challenge is On! Do You Have What it Takes?

Sign up now for the Zacks $100K Challenge. It's free. It's fun. It's the place to show your investing prowess. The best stock picker will be rewarded with a $100,000 contract with Zacks.

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