And the beat goes on
On the surface, the major averages have yet to show meaningful signs of distribution as the-train’s-leaving-the-station-so-I’ve-got-to-jump-on-board rally chugs on. Portfolio managers, petrified at the thought of missing out on a beefy rally in technology stocks, are out in force buying every dip in the institutional favorites.
There is still a decent assortment of stocks breaking out of bases on good volume. Last week, some of these names included Be [BEOS>BEOS], Cytyc [CYTC>CYTC], Dollar Tree [DLTR>DLTR], Electro Scientific [ESIO>ESIO], Gilat [GICOF>GICOF], Immunex [IMNX>IMNX], Instituform [INSUA>INSUA], Intraware [ITRA>ITRA], Liberate [LBRT>LBRT], McLeod [MCLD>MCLD], Microsoft [MSFT>MSFT], Navisite [NAVI>NAVI], Official Payments [OPAY>OPAY], Pinnacle [PCLE>PCLE], QRS [QRSI>QRSI], Qualcomm [QCOM>QCOM] (again!), S One [SONE>SONE], Siliconix [SILI>SILI], Silknet Software [SILK>SILK], Telcom [TLCM>TLCM], 3Com [COMS>COMS], and Winstar [WCII>WCII].
Last week’s move by Microsoft, the notable improvement in Dell [DELL>DELL], and the stand-up action in Sun [SUNW>SUNW], Oracle [ORCL>ORCL], EMC [EMC>EMC], Motorola [MOT>MOT], and Nokia [NOK>NOK], among other senior techs, tell you that the institutions remain out in force. The lack of distribution in the popular averages is further proof.
But make no mistake: Most of the market’s leaders have already broken out of bases, leaving the intermediate-term trader with a much skimpier menu to choose from than just a few weeks back. Currently, the growth sector is chock-full of names that are very extended from their most recent bases.
Though there are a few names that have yet to make their move, it is to be remembered that the real leaders have already launched their run-ups. By definition, they were the ones that broke out first in late October and early November. In general, the ones that move first, move farthest.
And so with many stocks putting in nothing more than two-week consolidation areas, and many others not even capable of that, the onus is on the intermediate trader to discipline his or herself and only limit buys to stocks coming out of sound bases.
In the meantime, it makes little sense to try and pick a top in the market. It makes much more sense to look at each stock in your portfolio on an individual basis. If it breaks down and/or undercuts a support level, it should be sold.
If not, enjoy the ride.
Setups: AnswerThink [ANSR>ANSR].