Flipping Charts A Fruitful Endeavor?
As I was doing my research
for this column,
I combed through hundreds of charts looking potential candidates that
would meet my criteria for trading. My friend Dave Landry taught me
that you can learn plenty by just flipping through 500-600 charts a
night. As you many of you know,
trading isn’t always black and white. What I have found is that a
swing trade setup has the potential of becoming an intermediate–term
trade.
In looking at IVAX Corp. (IVX)
the stock is consolidating and looks poised to continue higher.
H & R Block (HRB)
looks poised to test its high made on June 5, 2001. Note how the
Relative Strength line continued to ascend as price is consolidating.
Catepillar Inc (CAT)
is basing and is exhibiting similar action as HRB with respect to its
Relative Strength line.
Autonation Inc.(AN)
broke out of an 8 week base today, on good volume.
Steris Corp (STE)
has moved out of its trading range nicely on good volume. Steris
closed strongly in the top of its’ trading range.
Fifth Third Bancorp (FITB)
broke out to a new high Thursday after consolidating for almost 2
weeks.
Footwear company Reebok (RBK)
looks to be poised to breakout of a sloppy cup with double handle.
Among the ETF’s which gained
some ground were the Broadband Holdrs Trust (BDH)
which tacked on 5.3%. The Financial Select Sector (XLF)
also rose 4.0%.
The Wireless Holdrs Trust (WMH)
gained 3.4 %, however as you can see from the chart it appears to be
forming an inverted cup with handle as it pulls back towards its 20
and 50 day moving average. I would like to see it take out these
resistance levels before even considering taking a position in the
fund.
Trading to the downside were
the Oil Service Holdrs Trust (OIH)
which was directly impacted by lower fuel costs, the fund lost 4.1%.
The Utilities Holdrs Trust (UTH)
gapped lower and lost 3.5%.
Also losing ground was the
Utilities Select Sector (XLU)
which shed 2.6%
Remember that all securities
are risky. In any new trade, reduce your risk by limiting position
size and placing open protective stops 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
Loren’s lesson, Risky Business.
While
Loren Fleckenstein
enjoys his vacation,
this
column is being written by Greg Che.