Come To Papa
Our cups-with-handles runneth over!
Thursday brought a growing number of top-performing stocks advancing out
of the bullish chart pattern identified with William O’Neil and beloved by
intermediate-term traders.
After the severest bear market in the Set price
history of the Nasdaq, times like these can entice the hungry trader into euphoria. Enjoy the good times, but don’t lose your head.
stops on every trade. When a fresh intermediate-term rally ensues, the high relative strength stocks tend to lead the market. However, never forget that when a high RS stock breaks, it can break hard. It’s like a rocket springing a fuel leak on liftoff. Ka-BOOM! The time to pop the
champagne corks is after you’ve ridden a big move and sold your shares for cozy cash.
Every stock in your portfolio is a pig until you’ve made bacon! So watch your positions like a hawk.
This rally looks as authentic as they
come, but some breakouts will fail. Cut your losses ruthlessly while giving your
winners room for inevitable pullbacks. Ignore the talking heads. Ignore the news
media. Pay attention to the leading stocks, the major market averages and the trading volume on the New
York and Nasdaq markets. And remember the greats who shared the secrets
of trading growth stocks for the intermediate term. For me, that means a big Thank
You! to Bill O’Neil, Nicolas Darvas, Jesse Livermore and Mark
Minervini. Never forget the ones who brung ya to the intermediate-term trader’s ball!
Among the base builders that flashed
on our radar screen in the prior session, Career Education
(
CECO |
Quote |
Chart |
News |
PowerRating), Charlotte Russe
(
CHIC |
Quote |
Chart |
News |
PowerRating) and Skechers
(
SKX |
Quote |
Chart |
News |
PowerRating) broke out Thursday on strong volume.
Callaway Golf
(
ELY |
Quote |
Chart |
News |
PowerRating) broke out from a cup-with-handle pattern on fast trade. In prior commentaries, I’ve noted the strong performance leisure and entertainment stocks, particularly in the gaming industry. Past breakouts included Argosy Gaming
(
AGY |
Quote |
Chart |
News |
PowerRating), Harrah’s Entertainment
(
HET |
Quote |
Chart |
News |
PowerRating) and International Gaming Technology
(
IGT |
Quote |
Chart |
News |
PowerRating). Great group action! IGT appears to be tightening up here and may be priming for another move. Given the strong
distribution day on April 19, I’d insist that any playable breakout be accompanied by a volume
spike.Â
Orion Power Holdings
(
ORN |
Quote |
Chart |
News |
PowerRating) looks
interesting. The stock came under accumulation Thursday, springing 8.5% on
more than double average volume.
All stocks, of course, are risky. In
any new trade, reduce your risk by limiting your position size and setting a
protective price stop where you will sell your new buy or cover your short in
case the market turns against you. For an introduction to combining price stops
with position sizing, see my lesson,
Risky Business.