Intermediate Range Radar
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As the market consolidates, I’m
finding fewer high relative strength stocks setting up. However, as I’ve noted
in past commentaries, plenty of breakout leaders are holding up. So we still
appear to be in a healthy consolidation phase,
rather than a failure of the rally that began in April.
One of the few breakouts Tuesday was
The Great Atlantic & Pacific Tea Company (GAP),
which surged into new high ground out of a base-with-high-platform pattern.
A number of strong stocks, while not
into mature bases, bear watching on the longer term radar. Abercrombie &
Fitch (ANF)
seems to have settled into a long base with steady support around 40 dollars.
Note the resilient slope in the relative strength line. The stock also is
holding nicely above the top of the prior correction-recovery formation.
ESC Medical Systems (ESCM)
bounced off its 50-day moving average on higher volume than the prior session.
Not monster-sized accumulation by any stretch of the imagination, but
encouraging.
Most of the tech-focused
exchange-traded funds gave ground Tuesday. Wireless HOLDR (WMH)
lost 3.6%, hit by a warning from Nokia (NOK).
The Broadband HOLDR (BDH)
fell 2.9%, B2B Internet HOLDR (BHH)
2.4%, the Nasdaq Biotechnology iShares (IBB)
2.1%.
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.