Gripe Gripe Gripe
Among stocks making the sharpest
advances, the market Thursday served up little in the way of sound base
formations or breakouts for the high momentum crowd. So what I have to show you
will serve more as a lesson about what I don’t like to see in a chart.
Anaren Microwave
(
ANEN |
Quote |
Chart |
News |
PowerRating) jumped 9
5/16 to a new high of 75 7/8 on volume of nearly 1.2 million shares, double its
moving average. The stock’s relative strength line confirmed the move. And the
company has outstanding earnings growth. But look at the volatility. I would
have a great deal of trouble figuring out anything like a decent entry point and
support level. That’s why it is so important that price volatility contract
before a breakout.
On the other hand, Genesco
(
GCO |
Quote |
Chart |
News |
PowerRating)
rose 1 5/16 to a new high of 24 11/16 out of a symmetrical triangle with
confirmation the RS line. On a fundamental basis, this is a turnaround play. But
while price action was relatively well behaved over the formation of the
pattern, volume was weak.
Some of the Killer V’s are trying to
wedge back up on light volume. Watch out here. Look at Micromuse
(
MUSE |
Quote |
Chart |
News |
PowerRating).
Although the stock closed up, note that it closed near the bottom of the day’s
range after sellers took advantage of the intraday highs.
The top field of all charts in this
commentary uses a logarithmic price scale and displays a 50-day price average in
red. In the second field, a
blue relative strength line represents the displayed security’s price
performance relative to the S&P 500. The third field displays vertical daily
volume bars in black with a 50-day moving average in blue for volume.
All stocks, of course, are risky. On
any new trade, be sure to limit your position size and set a protective price
stop where you will sell your buy or cover your short to protect yourself
against severe losses. For an introduction to combining price stops with
position sizing, see my lesson,
Risky Business.