Three Steps And A Cloud Of Dust
The
three-steps-forward-and-two-and-a-half-steps-backward
market continued Monday.
The glamours were evenly split, most
benchmark techs shed a point-and-a-fraction, and five stocks in our Group of
Seven rose, thanks to the SDL
(
SDLI |
Quote |
Chart |
News |
PowerRating) takeout (see
my June 6 column for an explanation).
On balance, the day was a constructive
one, seeing as how there was practically zero distribution in the market’s
leaders, and given the lighter volume and tighter range in the Naz (I like to
see the intraday range tighten when a tradable is bubbling just beneath the top
of a multiday trading range).
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As Greg Kuhn dutifully pointed out in
his column
of today, a number of recent breakouts have “failed to generate surging
volume on their breakout attempts.”
This is objective evidence that tells
you this advance is not to be confused with the October-January run or the
February-March run, when the vast majority of breakouts occurred amid solid
activity.
As I’ve mentioned a number of times
recently, this lack of volume is likely a function of the uncertainty regarding
the interest rate outlook as well as the bruises absorbed by many players in the
41% Naz mauling that ended May 24.
The upshot is that the
intermediate-term player and the swing trader need to adjust their game plan
accordingly.
That is, a lower risk profile is
warranted, whether it be a reduced equity exposure, less use of margin, tighter
stops, or fewer positions with wider stops, etc.
Make no mistake, though.
The intermediate trend is up, and will
remain up until proven otherwise.
Applied Micro Circuits
(
AMCC |
Quote |
Chart |
News |
PowerRating)
appears to be emerging from a three-month triangle.
Art Tech
(
ARTG |
Quote |
Chart |
News |
PowerRating), mentioned
repeatedly in this space, broke out to a new high on thick turnover.
Bookham
(
BKHM |
Quote |
Chart |
News |
PowerRating) cleared a
nine-week base on thick turnover.
Cephalon
(
CEPH |
Quote |
Chart |
News |
PowerRating) pulled back
nicely on lower volume after Friday’s vault to a four-month high.
JDSU
(
JDSU |
Quote |
Chart |
News |
PowerRating) took itself out of
contention for a near-term breakout after getting sold off on word of its
planned buy of SDL
(
SDLI |
Quote |
Chart |
News |
PowerRating).
Juniper
(
JNPR |
Quote |
Chart |
News |
PowerRating) stalled near the
top of its three-month cup-with-handle.
Power One
(
PWER |
Quote |
Chart |
News |
PowerRating) is tracing a
two-week flat base after running up nearly 150% from its last base breakout.
Rainbow
(
RNBO |
Quote |
Chart |
News |
PowerRating) is in the midst of
building a three-week handle to go with its 15-week cup.