Water’s Fine, If You’re in Finance & Retail
Yes, everyone’s talking about the
lumps that tech took on Friday. However, the pockets of market strength held up
nicely.
As I’ve advised in my Feb.
13 and Jan.
23 Trading The News commentaries, look at the current strength in the
market, don’t keep looking for broken-down past leaders. Keep your eye on the road
before you, not in your rear-view mirror.
So
far, the leadership in retail and finance continues to hold up. Defense
continues to show relative
strength, too. Here’s a sampling of names that have marched to a drummer
other than big-cap technology.
Newport
News Shipbuilding
(
NNS |
Quote |
Chart |
News |
PowerRating), defense:
Allstate
(
ALL |
Quote |
Chart |
News |
PowerRating), insurance:
PNC
Financial Services Group
(
PNC |
Quote |
Chart |
News |
PowerRating):
CVS
(
CVS |
Quote |
Chart |
News |
PowerRating), drugstore retail (which broke out of a seven-week base; note the nice
volatility and volume contractions before the breakout):
American
Eagle Outfitters
(
AEOS |
Quote |
Chart |
News |
PowerRating), the apparel retailer, has had a decent run
since its Jan. 3 breakout (Point a in next
chart), is now churning a bit but still holding up. This is the kind of situation that has
you watching for distribution and opportunities to take partial profits.
All stocks, of course, 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.