The uptrend that began in July didn't deliver many big
Few breakouts gained 20% or more.
A weak uptrend has one benefit. When it ends and a market
correction begins, many stocks form base-on-base patterns. This
can be good.
As IBD founder and Chairman William J. O'Neil wrote in "How To
Make Money In Stocks," when a correction ends and a strong market
uptrend begins, the base on base "is apt to be one of the first
IAC InterActiveCorp (
) broke out of a cup without handle in July, but the breakout
didn't work. Now the stock is forming a base-on-base pattern. The
pattern is stage one, according to MarketSmith's
A first- or second-stage breakout is more likely to work than
those from later stages.
The current pattern shows bullishly tighter action than the
previous consolidation. However, since it's not known how long
the market correction will last, this pattern could look
different by the time a new uptrend is confirmed.
IAC holds more than 150 brands and Internet sites, including
Match.com and Ask.com. It also has a controlling stake in the
Newsweek Daily Beast Company, which IAC says eventually will
cease printing magazines and become an online-only outfit.
About half of IAC's revenue is tied to a listing deal with
The company paid its first dividend in December. The
12-cent-a-share dividend was doubled, as of the September payout.
The annualized yield is 1.8%.
Annual earnings increased 41% in 2010 and 172% last year as
revenue grew 22% and 26%. The Street expects a 25% pop this year
on a 33% revenue gain.
Q3 results will be reported Oct. 24 before the market's open.
Analysts expect a 20% increase in EPS and 34% rise in sales.
Drawbacks include last year's return on equity of 11%. While
this was the best in at least nine years, the ratio is below the
17% or greater level associated with elite stocks.
The number of funds holding shares rose this year through
September from 563 to 599. But funds' overall stake fell about