The Market Has Spoken Loudly–Are You Participating?

  • November 16, 2004
  • Tim Truebenbach


The NASDAQ has made a nice initial run
and is due for a pullback or at least a consolidation.  It
managed to take out a few areas of key resistance on its ascent.

 


 

The market’s first hurdle was
its 50-day moving average.  This was surpassed as the market began gathering
volume in early September.  It took three attempts for the NASDAQ to get past
its 200-day moving average, but the third one was a charm as the index pushed
ahead of this market in late October.  Since then, it assaulted 2055 and set a
higher high as this stage of resistance caused only a brief delay from about
11/9 to 11/11.

After all of this positive
action and buying, it is now wonder the market is feeling a little pressure
along with its leaders right now.  There is a good chance we could push higher
into year-end, and this pullback could provide the necessary fuel to do so. 

Recent leading stocks to join
the market after significant gains include Yahoo! (YHOO), Google (GOOG), Ebay,
Chicago Mercantile (CME), Starbucks (SBUX), Apple, and Urban Outfitters (URBN).

 


 

A couple of stocks have thus
far bucked the trend and moved higher.  DHB Industries (DHB) and Wipro (WIT)
are two names to consider.

 


 

Our good friend Taser (TASR)
has been getting new contracts left and right as the stock makes an assault on
its old high that could easily have been perceived a climax run.  Whether it
is just consolidating at this high and forming a handle before moving higher,
or about to roll over remains to be seen.  One thing is certain, if you play
this name be ready for volatility and consider a small position.

 


 

This market is one to be a
part of for the intermediate-term timeframe, or next few months at least. 
This pullback should provide two ingredients for investors: price declines to
buy into leading names or new breakout candidates.  Either way, based on
historical precedent and the recent price and volume action, the market has
spoken very loudly that it may be a good idea to participate.

Tim Truebenbach