Weekend Homework
Select financials continue to break
out or build bases. A few charts to let you ponder over the weekend. I encourage
you, though, to do your own hunting in the strong sectors: financial, retail and
defense. Here are some charts of rate-sensitive stocks that caught my eye.
Note the combination of a strong prior
uptrend, pattern
formation and relative
strength line confirmation in each of these stocks. If you’re an
intermediate-term momentum trader, that’s what you should be looking for.
Dime Bancorp
(
DME |
Quote |
Chart |
News |
PowerRating), consolidating
after a fine uptrend, broke out to new high ground on vigorous trade.
Concord EFS
(
CEFT |
Quote |
Chart |
News |
PowerRating) broke out of a
two-month base.
Okay, those stocks have broken out and
gotten away. How about some base builders to put on the old radar screen? I’m
keeping an eye on John Hancock Financial Services
(
JHF |
Quote |
Chart |
News |
PowerRating) and XL Capital
(
XL |
Quote |
Chart |
News |
PowerRating).
The top field of all stock charts in this
commentary 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, 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,
you’ll find extensive lessons in the Money
Management area of TradingMarkets’ Stocks Education section.