Follow Through Needed
The market
has been pulling back into the fed meeting, but there isn’t much to
say about the action. After logging too many distribution days, we saw a few
accumulation days on 6/19, 6/20, and 6/21. The market needs to follow through on
this attempted rally within the next few days before breaking below the low.
The market has been very choppy and
the lack of conviction, other than to the downside, looks like it may not end
anytime soon. Other than keeping an eye on accumulation and distribution in the
major indices, it will be important to see how two groups of stocks act. The
first group are recent breakouts such as Hotel Reservation Network
(
ROOM |
Quote |
Chart |
News |
PowerRating),
University of Phoenix Online
(
UOPX |
Quote |
Chart |
News |
PowerRating), Apollo Group
(
APOL |
Quote |
Chart |
News |
PowerRating) and Ebay
(
EBAY |
Quote |
Chart |
News |
PowerRating).
The second group to keep an eye on
will be the stocks that have successfully held their breakouts. This group
includes such names as Americredit
(
ACF |
Quote |
Chart |
News |
PowerRating), Krispy Kreme
(
KKD |
Quote |
Chart |
News |
PowerRating), Columbia
Sportswear
(
COLM |
Quote |
Chart |
News |
PowerRating), Metro One
(
MTON |
Quote |
Chart |
News |
PowerRating) and TRC Companies
(
TRR |
Quote |
Chart |
News |
PowerRating). The latter is
facing a true test as it breaks below its 50-day moving average on heavy volume.
Elan Corp.
(
ELN |
Quote |
Chart |
News |
PowerRating)Â has managed to pull
back to its pivot point and continually close above it. This is a bullish sign
for growth in general. Additionally, it managed the pullback on lighter volume.
Icon PLC
(
ICLR |
Quote |
Chart |
News |
PowerRating) has been able to hold above its breakout, and is also one to
keep an eye on. Quest Diagnostics
(
DGX |
Quote |
Chart |
News |
PowerRating) is setting up a handle for its 26-week
base.
The two confirmations one should be
looking for right now are accumulation in the market and successful growth
stocks with strong fundamentals breaking out of sound bases. If you are a more
conservative investor, you should need to see more confirmation of these two
points before buying stocks. If you are more aggressive and willing to be
“churned” a bit, look to buy solid breakouts in very, very
fundamentally sound companies…BUT keep your stop losses very tight and look to
take at least some profits sooner rather than later.
I am happy to get so many e-mails from
you. This alone makes it very worthwhile, and I am continually looking for
feedback on the column and any questions that I can answer either directly or in
future columns.
Until Thursday,
Â