These Names Will Rise The Quickest

  • January 4, 2005
  • Tim Truebenbach

The
market got hit on heavy volume as the NASDAQ was unable to sustain
the rally it had mounted in December to push through resistance at 2,150.  At
its lowest point, it did not quite manage to hit the 50-day moving average.

 

 

Since early October, I have
been bullish.  The last two days’ of trading does not change that stance, but
since I am human and I am watching money evaporate just as anyone else who is
long does it is cause to step back and take a close look at the market.

The NASDAQ has experienced
two blatant days of professional or above-average volume selling.  It usually
takes more than this to amount to a real decline.  This selling could be
normal profit taking and will disappear as prices have already come down. 
Secondly, the selling could be the beginning of institutional dollars leaving
the market.  Since we have only seen two days, and not three or four, I have
to believe the latter is true at this time.

The next thing we need to
take a close look at is what kind of shape the market’s leadership is in.  I
have talked a lot about stocks like Google (GOOG), Apple (AAPL), Chicago
Mercantile Exchange (CME), Ebay, Qualcomm (QCOM), etc.  Fundamentally, nothing
has changed with these companies.  Earnings have been strong and we have seen
no reasons that should lead me to think they will weaken.  One thing I am
looking forward to is how strong the reports are as they begin over the next
few days.  Technically, mostly every name I have talked about remains above
its 50-day moving average.  Yahoo! (YHOO) was sent below this line in today’s
session, but two things about this are clear: YHOO is not a leader in its
space (GOOG is) and the market’s sell-off put a lot of pressure on ALL stocks.

 

 

After stepping back, and
considering the market’s action of the past few months; I would chalk the
current selling up to a normal correction and profit-taking.  If this is the
case, it will pay off to position ourselves into the strongest fundamental and
technical names coming out of this correction.  These are the names that will
rise the quickest.  In any case, bunker down and don’t be surprised if this
market uses this sell-off to shake people out.

Tim Truebenbach