Don’t Forget This…
Greetings
from sunny
Arizona
! We
have been seeing some very solid action in both the market and leading stocks
over the past couple of weeks.Â
Biosite
(
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PowerRating), Genprobe
(
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PowerRating) and Lending
Tree
(
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PowerRating) have been three recent names that everyone wanted
to own at the beginning of their big days. These
names not only made a nice initial gap, but they pushed higher following the
gap.
 
It has been said
that three out of four stocks will follow the general market.
I have found this very true. When
the market is in bad shape, it’s best to stay out.
When we start to see accumulation, it is important to have a list of
stocks ready to buy. We follow certain
rules because the goal is not to buy just any stock, but somehow find our way
into ones like the three mentioned above.Â
Several weeks ago,
the market started displaying questionable action with some distribution,
before powering higher for the most recent leg.
Right now, I am seeing similar action in the market that may lead to a
short-term pullback or a correction in some of the leading stocks.
Yesterday, take note of the tail the Nasdaq left on higher volume.
Ideally, we would like to see the market decline on lighter volume and
rise on heavy trade. If the opposite
occurs, it may lead to a pullback. If
it happens many times over a few weeks, this rally may end.
I am also seeing
some leading stocks take a hit. J2
Global
(
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PowerRating) has been trading around the 50-day moving
average. If the stock moves below this
line on above-average volume, it is a negative sign for this stock.
  
Inamed
(
IMDC |
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PowerRating) is pulling back after a lighter-volume breakout through 37.
Stocks can and
should pull back because it is healthy for them to advance higher.
It becomes a problem when they retrace all recent gains and show that
they are unable to progress higher. It
is even worse if they do this on very heavy volume.
Endo Pharmaceuticals
(
ENDP |
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PowerRating) is
one to watch because volume is increasing as it moves back down towards the
area it gapped through after good earnings.
After all of these
things I have mentioned to watch, it
is still extremely important not to forget that this market is still in a
confirmed rally until we see substantial proof to the contrary. We
should still be looking around for potential setups.
If we remain healthy, finding these sound companies forming solid
technical patterns will exist. Stocks
that have been setting up such as Amgen
(
AMGN |
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PowerRating)
will find support at their 50-day moving averages and eventually break out.
It will pay off huge to believe in what the market has already told us.
Until Thursday,