Perky, Perky
More
constructive action in most of the right places Friday.
If not as spectacular as Wednesday or
Thursday, the Nasdaq showed good tone nonetheless.
A glance at a chart of the Naz shows
an equally explosive move off the low of June, which ultimately proved to be an
intermediate-term rally with little sponsorship or depth.
I am not saying that this isn’t the
beginning of a durable longer-term advance.
It may or may not be.
I am not smart enough to know.
What I am saying is that only in
hindsight will you know how lasting an advance will be.
Playing the probabilities is what
trading is all about, since you never know for certain when war could break out,
an oil embargo could start, the Fed could lift rates unexpectedly, etc.
Otherwise, I am a pattern player, not
an indicator player.
In fact, I only depend on one
technical indicator for stock selection: the relative strength line.
The time at which I most depend on
this indicator is in the wake of a scathing sell-off.
At a glance, it allows me to separate
the men from the boys among the emerging leadership.
For example, EMC
(
EMC |
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its hiccups over the past 2+ weeks, shows its RS line a whisker away from new
high ground, with its price lagging.
Ditto for Sun
(
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This is bullish for a stock.
The same goes for Corning
(
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an important bell given its exposure to the avant garde optical segment…it’s
now strung together three accumulation days in the past seven.
Network Appliance
(
NTAP |
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PowerRating), the
stalwart glamour, emerged from a four-week zone, but couldn’t find enough
sponsorship to follow through into virgin territory.
Despite the fact that much basing work
needs to be done in many growth names, the opportunistic intermediate-term
momentum buyer should have a watchlist of issues that are farthest along in
their patterns, showing the requisite earnings growth and relative strength.
For it is to be remembered that
bottoms, if that’s what this is, are made quickly, unlike tops.