Monday Blues
It wasn’t exactly a
stormy Monday in the growth
complex, but the proceedings were certainly damp enough to leave most names that
matter soaked in red ink.
Volume in the Naz let up a bit, as
expected for a Monday.
The key point to note when looking at
a chart of the Comp is the fact that there have been four distribution days in
nine outings.
This is not the sort of behavior that
warrants an invested posture on the part of the position trader in growth
stocks.
…particularly when proper basing
action among growth stocks is relatively few and far between.
In the oils, profit-taking prevailed.
And so Diamond Offshore
(
DO |
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PowerRating), Ensco
(
ESV |
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PowerRating), and Global Marine
(
GLM |
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ranges.
If you’re considering trading some of
the oils, you should realize that you’re dealing with an entirely different
animal than you are when you trade a growth stock.
Yes, the patterns may be the same in
some cases.
However, since you’re dealing with a
vehicle that’s largely dependent on the price of a commodity, you often get a
more choppy look to a trend, and not the straighter move you see in many bona
fide growth stocks.
And then there’s the issue of
liquidity.
Many explorers and drillers trade less
than 100,000 or 200,000 shares a day on average.
And you know what happens with
thinly-traded stocks.
They’re great to be in on the upside,
but are prone to air pockets when it comes time to leave the party.
And that’s not even considering the
larger bid-ask spreads.
Just something to think about.
In the benchmark set, red was the
rule, with EMC
(
EMC |
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PowerRating) and Sun
(
SUNW |
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Of note was the 6% loss incurred by
JDSU
(
JDSU |
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opticals.
SDLI
(
SDLI |
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on volume.
Among the names, Micromuse
(
MUSE |
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showed good tone as it climbs the right side of its six-month range.
Network Appliance
(
NTAP |
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rare standout, cracking the top of a multimonth base on thick turnover.
Again, a heavy volume washout is the
desired course of action short term.
Until then, and until the
beneath-the-surface basebuilding process matures, the long-side-only player must
be patient and let the clouds pass.