In This Pullback, Look For Stocks With These Characteristics
The major averages appear to be in the midst of a
much-needed correction. Today’s action saw about a 1 ½% decline in the Nasdaq
(
$COMPX |
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Chart |
News |
PowerRating) and S&P 500
(
$SPX.X |
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Chart |
News |
PowerRating) and volume came in at about
yesterday’s levels, indicating no rush for the exits by large institutions.
With the exception of J2 Global’s
(
JCOM |
Quote |
Chart |
News |
PowerRating) resiliency
and move higher, most leading stocks gave back recent gains. For the most
part, most declines came on lighter volume. Forest Labs
(
FRX |
Quote |
Chart |
News |
PowerRating) was unique
in that it disappointed investors with its results. Subsequently, the stock
took quite a hit on heavy volume.
Most leading stocks have not shown any obvious sell
signals. It is never fun giving back profits, but then again, before the last
few days, who knew to part with stocks without the fear of never getting them
back? A stock like Ryland
(
RYL |
Quote |
Chart |
News |
PowerRating) gave indications around the mid-60’s that
it was due for a correction. Anyone that took that signal missed out on the
last 10 points! This is why we are slow to part with quality stocks in the
portfolio.
Sweeping corrections such as this gives us a great
opportunity to spot strength. Continue to be on the lookout for stocks
declining on lighter volume and finding support at key areas such as the
50-day moving average.
I will be going on a much-needed vacation next week and the column will be
returning the following week.
Aloha and see you in a week!