Can It Hold?
The market is
posting solid gains on much stronger volume than Friday. This is a
good start to shaping up as long as it can hold until the close.
Friday’s meager bounce could be
counted as the first day of a rally. By doing this, we would look for
confirmation in a 2% up-move on heavier volume than the previous day from this
Thursday through next Tuesday. Of course this should coincide with strong growth
companies setting up in bases within 15% of their highs. Unfortunately, this is
not occurring. My weekend research produced the fewest potential candidates to
sort through of the entire summer.
Diagnostics Products
(
DP |
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PowerRating) is moving
higher today in an attempt to take out its pivot of 41.29. Frontier Oil Corp.
(
FTO |
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PowerRating)
took out its pivot on 8/29 and has been able to move almost 7% above it to this
point.
But let us not forget that the
majority of stocks will follow the market. Two recent breakouts that have run
into trouble are Corinthian Colleges
(
COCO |
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PowerRating) and Resmed
(
RMD |
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PowerRating). COCO made multiple
attempts to launch a breakout and was never able to muster the volume needed to
accomplish it. On Friday we experience why following rules remains important.
Although the stock reported good earnings, it was only able to meet investor
expectations, not beat them. Investors responded by knocking the stock down over
25%, an amount that would put a dent in any portfolio.
RMD is testing support at its 50-day
moving average after an unsuccessful breakout attempt.
Two of the few companies that appear
intact for a market rally and confirmation are Province Healthcare
(
PRHC |
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PowerRating) and
Lifepoint Hospitals
(
LPNT |
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PowerRating).
As the market wades through
uncertainty, it is best to remain in cash or invest very conservatively. When
stocks begin breaking to new highs on strong volume, this will provide us with
our final indication that it is time to plunge in.
Enjoy the short week,