Deciphering The Action
Microsoft, Microsoft, Microsoft!
Just
when you think it’s down and out, the ultimate tech bellwether saves the day and
is the first tech company to say that things may be getting better. Softee
(
MSFT |
Quote |
Chart |
News |
PowerRating)
was
my first big winner in 1995, and I’m always a fan of a company that saves the
day!
The market has attempted to baffle
people, but we need to take a look at the current action to decipher what’s
really going on.
Yesterday, the Dow and Nasdaq moved up
on higher volume than the day before: a bullish sign after taking out the
previous rally’s lows. Additionally, the indices finished towards the highs for
the day as they rallied into the close.
Since we took out the lows, the rally
officially ended and we’d need to see another FTD of the current attempt to put a
new rally in effect. Although this seems like a lot of useless
“churning” for
investors and the indices, this is how markets weed out participants. In the
meanwhile, I have been finding a few more solid companies setting up in strong
bases. Although this is not as plentiful as the 50+ stocks I could identify
during late-April, early May, it is definitely a positive sign.
Americredit
(
ACF |
Quote |
Chart |
News |
PowerRating) continues on its
recent breakout of a “V”-shaped base. Krispy Kreme
(
KKD |
Quote |
Chart |
News |
PowerRating) bounces off its 50-day
moving average. Ivax Corp
(
IVX |
Quote |
Chart |
News |
PowerRating) sets up in the leading Medical Sector. US
Physical Therapy
(
USPH |
Quote |
Chart |
News |
PowerRating) is running into some trouble on volume today. If a stock
you weren’t sure about breaks out and moves higher without you, keep in mind
that our goal should not be to just make money, but to make money when the
chances of success are at their peak.
Lifepoint Hospitals
(
LPNT |
Quote |
Chart |
News |
PowerRating) broke out
of a 27-week base on above-average trade yesterday, but is pulling back today,
although on lighter trade. Homebuilder, Ryland Group
(
RYL |
Quote |
Chart |
News |
PowerRating) is breaking out of an
8-week cup-with-handle base today on below-average trade. Beazer Homes
(
BZH |
Quote |
Chart |
News |
PowerRating),
Meritage
(
MTH |
Quote |
Chart |
News |
PowerRating) and the entire homebuilding group has found a second wind as they
are moving towards their highs. Hotel Reservation
(
ROOM |
Quote |
Chart |
News |
PowerRating) has been one of the
recent big winners as it holds about 28% above its breakout point.
Here’s an example of success!
As breakouts appear and follow
through, use that as an indication of the market’s strength. Also, continue to
track the averages for further signs of accumulation or distribution. These two
simple indicators should be our guide on investing in the current environment!
Good Trading,