A Tricky Animal
Just after
the S&P 500 posts four days of distribution in two weeks, it
rallies 2% (at the time I am writing this) and volume is heavier…talk about a
confusing market!
Meanwhile, the picture becomes clearer
as we take a look at the lack of stocks that have successfully broken out and
continued to move higher. Additionally, there are very few quality companies
that I have spotted setting up sound bases waiting to break out.
American Healthways
(
AMHC |
Quote |
Chart |
News |
PowerRating) moved
through its pivot yesterday, on above-average volume. The stock is following up
the breakout today, again on above-average volume, although the company is
lacking many of the fundamental traits I would like to see in a quality growth
stock. Other than this company, there just haven’t been very many stocks
breaking out on good volume. Taro Pharmaceuticals
(
TARO |
Quote |
Chart |
News |
PowerRating) is working on a
handle of a multi-month base, but the volume on up-days is usually lacking,
indicating a lack of conviction.
One stock that I have found particular
interesting, from a technical standpoint, is Advanced Technical Product
(
ATPX |
Quote |
Chart |
News |
PowerRating).
Personally, I’d have a little trouble buying this one due to some shaky
quarterly earnings growth, but the technical picture looks solid, as the stock
is forming what looks to be a bull flag, with the pivot of 29.61.
At this time, it is extremely
important to follow rules and make no compromises. The market is a tricky animal
and just when things look obvious, it tends to flash signals that may appear
contrary and can sucker wavering investors in. For me to even consider a
purchase after we just saw the four days of distribution, the stock would have
to be perfect and I would need to start seeing accumulation in the general
market.
For now, I will most likely sit back
and watch things unfold, from a cash position.
Have a great weekend,
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