The Real Market
Given the sharp gains in
the NYSE and Nasdaq Composite indexes off their March and April lows, a period
of consolidation is perfectly natural. Those market observers who are writing
off the current rally on the basis of the floundering of big-cap tech seem to
ignore this as well as miss the fact that the rally leadership ain’t in big-cap
techs.
Weeding Out The Weak
One key to the long base, or
consolidation, is a dry-up of volume through the body of the pattern, indicating
that weak holders are slowly being ground out of the stock. Then the stock comes
alive on the day of the breakout, sometimes a day before breakout.
Tech ETFs Bounce
The Net-focused exchange-traded funds
led a weak bounce Thursday among the tech-focused ETFs.
Leaders Lead
The true leaders
continued to lead Wednesday while the big-cap techs gave ground. This is what
separates the successful intermediate-term traders from the pack. By monitoring
the high relative strength stocks in healthy price trends, we spot the
leadership while the indexes mislead the crowd.
Tech ETFs Break Support
The tech-focused tradable
funds Wednesday, some breaking below support levels, after tech shares fell on
an overnight warning from Sun Microsystems and analyst downgrades.
No Rear-View Mirror
One of the best rules for
the intermediate-term momentum trader is to stick with the current leaders.
Don’t try to play the broken down leaders of the past.
Defensive ETFs Lead, Tech ETFs Weaken
The defensive exchange-traded funds
outperformed Tuesday as tech-focused ETFs came under profit-taking.
Fatigue And Resilience
The breakout leaders behaved generally
well Friday, although a few stocks are looking tired.
Tech, Utility ETFs Soften
The tech-focused
exchange-traded funds Friday pulled back, but the price moves remain within
normal volatility ranges.
Tech ETFs Lead, Resources ETFs Soften
The tech-focused exchange-traded funds
Thursday led their peers while the tradable funds focused on basic industries
weakened.
Distribution Potholes
Some of the high relative strength
leaders are acting tired as the market wrings its hands on valuation grounds.
Hot Topic and Charlotte Russe are two examples.
High RS Pull Back
High relative strength stocks pulled
back Wednesday, buffeted by the political uncertainty in Washington, and coinciding
with overbought levels in Nasdaq stocks.