Finding Momentum With Some Value
I know this is not what you
want to hear but it is what I have observed. In the last three weeks the top
performing Market Sector Indexes have been the following areas
Dow Jones Transportation and Amex Composite. So why am I telling you this?
Well for one it shows that since January 1, these fo
outperforming the NYSE broader market index. And secondly, we have not seen any sector
rotation out of these sectors indicating that we should start jumping into growth stocks
just yet. Right now, we should be patient with the tech sector, as it is beginning to show
some signs of putting in a bottom; however for the time being we are seeing that the best
bets are in the Value sector stocks.Helvetica>
Remember this is called The Momentum Trader, which means we will be looking for
momentum trades in value, growth, small caps, mid capssize=”2″ color=”#000000″ Helvetica>—as long as the stock we are eyeing meets our
fundamental and technical criteria.Helvetica>
Okay so looking at some value stocks lets look
at Scior (
the stock is forming a high level symmetrical triangle. The ethical drug company is
showing some positive fundamentals.
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In the tech sector, Goto.com looks interesting, sales have been increasing on a quarter
over quarter basis and on a yearly comparative basis (198%, 199%, 202% and 198%) The
company had its first profitable quarter which ended June 30, 2001. The stock is
setting up a low-volatility
situation.
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Looking at a couple of ETF’s the
WEBS-Korea Benchmark looks like it may test its pivot point of a multi-week cup with
handle pattern.
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Also I mentioned that we should
continue to monitor Taiwan as a leading indicator that a bottom in the Semiconductors may
be in the making. Note how the the WEBS-Taiwan Benchmark (
is forming a low level cup with handle. A bullish signal would be to see price break above
the pivot point on high volume and closing strongly above the moving averages.
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Interesting how the Korea and
Taiwan have developed similar patterns? Could Korea be an indicator that the Semis are
bottoming? Something to think about.
Remember that all securities are risky. In
any trade, you should always reduce your risk by adjusting position size and placing open
protective stops where you will sell your long or cover your short in case the market
turns against you. For an introduction to combining price stops with position sizing, see
Loren’s lesson,
Greg