Keep Longs And Shorts On Your List
Hedge fund manager Mark Boucher always has his eyes
on the long and short opportunities no matter what the market is doing. As the
market trends assert themselves, Mark is ready to shift his weight in one
direction or another.
Thursday’s market action into the close is a good demonstration of why it
pays to include both the strongest and weakest stocks in your daily watchlist,
regardless of what directional bias you may have about the overall market. The
Nasdaq staged one of its wonderful intraday turnarounds and turned green in the
final hour after a bounce from triple-digit red. The shorts ran for cover in a
number of stocks.
Given that this is the third time in the past three weeks that the Naz has
found support upon touching the vicinity of the May lows, some traders may see
this as a durable floor, at least for the time being. If that is the case, your
list of long candidates comes into play.
You would look at stocks, such as AIG, which have the following
characteristics:
-
High relative strength: AIG has a TradingMarkets.com
3-month RS ranking of 80. -
Strong uptrend: AIG has been trending steadily higer
for the past seven months. It’s not going at a terribly exciting pace, but
at least it’s been consistent. -
Pulling back to potential support: AIG pulled back to
a confluence of its seven-month trendline, its 50-day moving average, and
the lows of its three-week trading range.
Till Friday,
Eddie