Why You Should Watch Your Breakouts And Breakdowns Even More Closely This Week
Time constraints today are forcing me to keep
this short and write it a little earlier today. With this being a holiday week,
you can expect volume to be lower than normal. When volume is light, it becomes
much easier for large institutions to manipulate stock prices. This means you
may want to beware of price moves that are engineered to take out technically
strategic levels where a large number of stop orders (buy or sell) may likely
lie. Watch your breakouts/breakdowns a little more closely to see how they act.
Speaking of breakouts, many of
them seem to be struggling a bit more lately than they had been. This is another
potential warning sign for the market. Here are a few examples of what I’m
talking about:
(All charts were created
mid-day, and do not include today’s closing numbers.)
Breakout players should
continue to monitor the action of new breakouts. If this type of action becomes
more commonplace, you will want to be aware of it so that you may adjust your
strategies accordingly (smaller positions sizes, tighter stops, quicker profit
taking, only taking top candidates, etc.).
This breakout action combined with the breadth issues I discussed
last week and the potential topping patterns that seem to be forming in the
indices are cause for increased caution. If you’ve had a good quarter, be
careful not to give too much of it back. Monitor market action carefully, and be
ready to move in either direction, since the market could gain conviction as
earnings season begins to unfold.
Best of luck with your trading,
Rob Hanna