Not So Fast …
If you’re going to try longs in this
market, and you trade the medium term, avoid the temptation to chase recent
snapback action in the battered big-cap techs. These stocks are a LONG way from
chewing through mountains of overhead supply heaped atop them by the Nasdaq
bear.
If you do venture long trades in this
environment, keep your exposure small. The best way to trade for the long pull is
with the market wind at your back, and that climate certainly does not prevail
now, despite action of the past two sessions.
One interesting stock in the tech area
is Great Plains Software
(
GPSI |
Quote |
Chart |
News |
PowerRating), which is in a tight consolidation atop a
strong uptrend confirmed by its relative
strength line.
The defense-aerospace group continues
to act well. B/E Aerospace
(
BEAV |
Quote |
Chart |
News |
PowerRating) moved to new high ground on volume of
627,400 shares as volume increased 42% over normal trade as averaged over the
past 50 sessions.
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 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,
check out the Money
Management area of TradingMarkets’ Stocks Education section.