Waiting Game
It’s a waiting game, and even if this
market has seen the lows, we’re likely to remain in a waiting game for weeks or
months, as so many of the high growth stocks will need to repair and build bases
for the intermediate-term trade.
Some of the select retails and
rate-sensitive stocks are holding up well or acting constructively. Examples are
home builders Lennar
(
LEN |
Quote |
Chart |
News |
PowerRating) and Centex
(
CTX |
Quote |
Chart |
News |
PowerRating). But the overall character
of this market remains unfavorable as evidenced by the scarcity of good basers.
The top field of the above chart 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,
you’ll find extensive lessons in the Money
Management area of TradingMarkets’ Stocks Education section.
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