Taking Weakness In Stride
More of what I like to see on weak index
days when I’m long. While the Nasdaq, Dow and S&P pulled back Thursday, market volume
declined. Meanwhile the high relative strength breakouts held up nicely.
It may not sound exciting, but quiet
price-and-volume action after sharp gains is welcome to the intermediate-term
momentum trader. Let these stocks consolidate and find support at their new
levels. Let shareholders who can’t stand the heights trickle out rather seeing
our positions hyper-extend and scare out investors in droves.
Callaway Golf
(
ELY |
Quote |
Chart |
News |
PowerRating) appears to be
setting up a cup-with-handle.
Ralph Lauren
(
RL |
Quote |
Chart |
News |
PowerRating) is trying to
build the right side of a correction-recovery base.
A number of our past breakouts drifted
lower or moved sideways on declining volume, a constructive sign. Examples
included BEI Technologies
(
BEIQ |
Quote |
Chart |
News |
PowerRating), Career Education
(
CECO |
Quote |
Chart |
News |
PowerRating) and Skechers
(
SKX |
Quote |
Chart |
News |
PowerRating).
Manor Care
(
HRC |
Quote |
Chart |
News |
PowerRating) shot higher
following Wednesday’s bullish engulfing day.
All stocks, of course, are risky. On
any new trade, be sure to limit your position size and set a protective price
stop where you will sell your buy or cover your short to protect yourself
against severe losses. For an introduction to combining price stops with
position sizing, see my lesson,
Risky Business.