Buy Low and Sell High?
Each evening we focus on the most interesting aspects for the upcoming trading day. The comments are based on observations of the nightly updates of the Stocks/Sectors and Market Bias pages. They are provided for educational purposes only and are not intended to be direct trading advice. Also, keep in mind that these remarks are made up to 12 hours in advance of the markets opening. Therefore, overnight events may alter the outcome of these observations.
At the time this is being published, the S&P Globex Futures are trading .10 points lower and the bond market is trading up 1 tick.
“Buy low and sell high” is an age-old Wall Street adage that we’ve all heard again and again. The problem? The cheap often become cheaper. Today’s action in Lands End [LE>LE] provides a great example. The stock appeared “cheap” after losing nearly 40% of its value in early November (a). Then today, the “cheap” stock got cheaper by nearly 25% on a negative earnings forecast. The moral-don’t bottom fish!
On the Pullbacks List, Titan [TTN>TTN] closed well and looks poised to resume its uptrend. Mips Technology [MIPS>MIPS] is a pattern I call a Trend Knockout (TKO). This is where a strongly trending stock sells off (a) and takes out (trades below) the prior two lows. This often knocks out the weak hands and clears the way for the security to trade higher.
For you breakout players, Purchase Pro [PPRO>PPRO], mentioned over the past two nights (see archive), broke to new highs on an expansion of range today out of a pullback/Trend Knockout. Grupo Televisa [TV>TV], on the New 60-Day Highs on Double Volume List, also broke to new highs on an expansion of range (and volume) today.
On the short side, Extreme Networks [EXTR>EXTR], on the Pullbacks From Lows List, closed poorly and looks poised to resume its breakdown.
Best of luck with your trading on Thursday!
PS – Reminder: Protective stops on every trade!