More Waiting
Worries over a slowing economy’s
impact on retailers hit that sector. Some of my momentum favorites in that area
took it on the nose. Meanwhile, a number of stocks continue to make progress
toward completing bases, but we’re still far from the kind of proliferation of
base completions and breakout’s required by the intermediate-term trend follower.
American Eagle Outfitters
(
AEOS |
Quote |
Chart |
News |
PowerRating),
which came out of a cup-with-handle pattern on Jan. 3, gave up 4 1/2 to 44 3/4
on average volume, closing right on the prior breakouts buy point of 44 3/4.
Admittedly, the original cup-with-handle was five weeks in length, the barest
minimum for the pattern. Longer versions have higher success rates.
First Tennessee National
(
FTN |
Quote |
Chart |
News |
PowerRating)
continues to march nicely up a trendline.
Bell
Microproducts
(
BELM |
Quote |
Chart |
News |
PowerRating) surged 2 11/16 to 29 9/16, clearing its 50-day moving
average on nearly four times its usual trade. The relative strength line needs
lots of work. On breakouts, I want the RS in or verging on new high ground on at
least a six-month basis. I also would want to see the price clear the mid point
(the halfway mark between pre-correction and trough), before considering the
stock for my watch list.
The top field of all stock 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. 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. For further treatment of these and related topics,
you’ll find extensive lessons in the Money
Management area of TradingMarkets’ Stocks Education section.