Watch Leaders, Wait For Growth
The financials continue
to act well, but authentic growth stocks setting up in or emerging from valid
bases remain scarce. Don’t let the indexes shake you out of your game if you
trade growth stocks for the intermediate term. They’ll come around, but with
such deep damage done over the past year, they’ll need time to recover and set
up.
Also keep an eye on the breakouts you’ve found as well as ones spotted in this commentary like
(
IGT |
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PowerRating) and
(
MTON |
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PowerRating). As The
Amazing Life of Jesse Livermore taught us nearly a century ago, the leaders must be able to lead in order for a rally to possess credibility. Some breakouts always fail, but as a group, we should see a number of them hold up in the face of normal market pullbacks on the major indexes.
Loews
(
LTR |
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PowerRating) is
digesting recent gains. The holding company has subsidiaries in property,
casualty and life insurance as well as the production and sale of cigarettes
(Lorillard), the operation of hotels (Loews Hotels Holding), the operation of
offshore oil and gas drilling rigs, and the distribution and sale of watches and
clocks.
Pacific Century Financial
(
BOH |
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PowerRating) gapped into new high ground on impressive volume. The holding company
for Bank of Hawaii said it would cut 4,166 work force to 3,070 by 2003.
Fluor
(
FLR |
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PowerRating) is worth
keeping an eye on. The stock is lurking beneath resistance at 46.
Remember
that all stocks are
speculative. On any new trade, be sure to limit your risk by limiting your
position size and setting a protective price stop where you will sell your 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.