Why Does It Matter?
I have heard one question
surface
over the last few days: Is this a Bull Market kicking off or is it
another bounce along the bear market’s path?Â
My answer is simply, “I don’t know,” followed by a question of my
own: “Why does it matter?” The
major indices all confirmed that there is accumulation occurring, as they
followed-through on Tuesday.
The reason I feel it doesn’t matter is this:
If we
follow solid rules, such as the ones I have adopted, amended and practiced for
my clients and myself, money can be made in either scenario.
If this turns out to actually be a new Bull Market, great, we’ll all
make more money then! For
example, in the service yesterday, we initiated a long position in SPYs
and/or QQQs, depending on what subscribers chose.Â
Obviously, that is already paying off and we’ll either be forced out
for small profits soon or the market may march much higher and allow us larger
gains.
Today the market is rallying very nicely on heavier trade
than yesterday…just the way we want to see it.Â
Yesterday’s pullback came on lighter trade than Tuesday…just the
way we want to see it. Â
It is now
time to seek out solid companies forming sound bases.Â
This is important because growth stocks are not out of the woods yet.Â
Anthem
(
ATH |
Quote |
Chart |
News |
PowerRating) is showing us this.
The
stock broke out of a fairly sound base before the follow-through on Tuesday.Â
The stock promptly marched to a new high before reversing today to
trade lower on heavy volume.
Caution is warranted along with strict adherence to
stops. Cognizant Tech
(
CTSH |
Quote |
Chart |
News |
PowerRating)
gapped through its pivot of 64.92 this morning, only to mark a pause following
its 8-day run-up. If this stock
does march higher, pullbacks like this will happen from time to time. Unfortunately, a pullback can also turn into a disaster without
honoring a stop when it gets hit. Unwise
shareholders of Advanced Auto Parts
(
AAP |
Quote |
Chart |
News |
PowerRating) are finding this out the hard way. Similar to ATH, AAP attempted a breakout through 55.60 before the
follow-through day and looked to be on the right track.
Today’s reversal proves otherwise.
The early leaders out of the gates appear to be primarily
coming from the medical sector. Forest
Labs [FRX
FRX] and Coventry Health
(
CVH |
Quote |
Chart |
News |
PowerRating) remain prime examples.
As the market continues to act well and
show signs of accumulation, more potential set-ups will appear.Â
Right now, stocks have a bit of work to do on their current bases.Â
American Pharmaceutical
(
APPX |
Quote |
Chart |
News |
PowerRating) is a perfect example.
Right now is a great time to sort through charts and
constantly scan for setups. If
this market hangs in there, these stocks will be invaluable to know about before
they make their moves.
Have a great weekend,