Can These Leaders Hang On?
The market continues its impressive role and that is
about all we need to take into account. The
major indices have been rising on heavy trade and pulling back on lighter
volume.
Today’s action shows the market down, but volume is
coming in much lighter as we approach the holiday.
Quite a few stocks have been breaking out over the past
week, but I still have not been too convinced with this action. The reason lies in the fact that
while several stocks can be considered market leaders because they have gone on to at
least 20% gains since their initial breakout, others
have just broken out, chopped around and
immediately reflected any overall market weakness. Expedia
(
EXPE |
Quote |
Chart |
News |
PowerRating) and ICU Medical
(
ICUI |
Quote |
Chart |
News |
PowerRating) are two recent examples.
EXPE broke out in the last hour of trading yesterday on
huge volume during the breakout. Today
it is already trading below its pivot point of 76.44, but volume is coming in
light as compared to the average daily volume.
ICUI actually set up and broke out in a very healthy
fashion. Its pivot was 41.30, and
it actually rose to a 9% gain in only 3 days.
Since then, it has traded as low as 38.37 in what I would call a failed
breakout.
Mentor
(
MNTR |
Quote |
Chart |
News |
PowerRating) comes from the same group and has acted a
little better since breaking through 41.50.
It has remained above this point and could possibly be consolidating
for another move.
PEC Solutions
(
PECS |
Quote |
Chart |
News |
PowerRating) broke out of a multi-month base
yesterday on good volume. The
company has a very strong growth rate and shows solid accumulation throughout
its base. We’ll see how this
one acts as we are in need of some leadership that holds firm.
It showed promise as it approached its pivot of 36.32 on a pullback,
but held firm at this level.
Only about 40% of breakouts should return to their pivot
points, so when we see more than that number do so,
the market is flashing a small warning signal. At this time, the market is still acting well and I would look to make
small purchases in potential leaders. In
doing so, it is very important to have proper risk management in place through
stops, reduced position size, etc. Capital
Preservation is still important until stocks prove themselves. At that point, we will have more profits in the accounts to be more
aggressive with.
Teva Pharmaceuticals
(
TEVA |
Quote |
Chart |
News |
PowerRating)
has been working on a handle for the past couple of weeks and we’re finally
seeing volume quiet down. This
stock may be worth watching over the next few days.
Let’s hope some of these recent breakouts can hang on
and join Forest Labs
(
FRX |
Quote |
Chart |
News |
PowerRating) among the ranks of leaders.
Happy Thanksgiving!