Focus on the strongest sectors
Timothy J. Truebenbach is the
President of True Capital Management and general partner of True Capital
Partners LP, a hedge fund. He uses a disciplined model that trades on the
intermediate-term time frame. For a free trial to Tim’s Nightly Stock Analysis
Report
click here or call
888-484-8220 ext. 1.
The market still appears to be attracting buyers and the
NASDAQ managed to hold its 200-day moving average…barely.
The market began a shaky uptrend on August 15th and has since been building the
momentum. With strength coming out of select financials, semis, small- and
large-cap names it is tough to argue that we may very well be heading higher.
First Marblehead
(
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PowerRating) and Diodes
(
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PowerRating) signify strength from two
leading groups in the mid-cap arena. Both stocks exhibit strong fundamental
traits such as high earnings growth rates and strong return on equity that
historically propel stocks higher.
Large cap names such as Cisco
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PowerRating), Motorola
(
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PowerRating) and Franklin
Resources
(
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PowerRating) are examples from the other spectrum of the market. Earnings
growth has accelerated and these names have recently emerged from solid base
patterns.
With the market itself seeing evidence of accumulation and individual stocks
displaying an ability to push higher, it is easy to say that we are currently in
an uptrend. During times such as these, it is important to find the strongest
areas of the market and put money to work. For the vast majority of stock market
investors, stocks are a growth engine to their portfolio and this is when the
‘magic’ happens.
As everyone knows, the stock market is cyclical, so we will be watching out for
signs that the uptrend is ending each trading day. If we start to see the market
decline on higher volume, then we have a warning sign. If some of the stocks we
have been talking about fail to rally and decline on heavy volume, then we have
another warning sign. If signs such as these start to pile up, it will be time
to pull money back; but for now the stock market appears very solid.