Hang In There
Last Thursday
put the final nail into the coffin, with a fourth day of distribution
on the NYSE out of eight trading days. That simply tells us that cash is a good
place to be.
Breakouts have not changed their
recent pattern of breaking out and falling a few days later. Although there
appears to be some short-term trading profits still up for grabs, the market
distribution does not instill confidence in buying and holding stocks. Last
Friday, the Naz posted a gain and the earliest we will be able to see a follow
through day on that gain will be tomorrow.
Right
Management Consultants
(
RMCI |
Quote |
Chart |
News |
PowerRating) is a recent example of the choppy
breakout action we have been seeing. In typical fashion, the stock blasts
through its pivot point on heavy trade, follows through the following morning (Tuesday)
before reversing to violate the pivot.
Some of the recent breakouts have
managed to push higher, such as Ryland Group
(
RYL |
Quote |
Chart |
News |
PowerRating) while others have not been able to recover their former pivot points
such as Movie Gallery
(
MOVI |
Quote |
Chart |
News |
PowerRating).
Today, Penn
National Gaming
(
PENN |
Quote |
Chart |
News |
PowerRating)) is getting knocked back below its pivot
after its inability to break higher.
Itron
(
ITRI |
Quote |
Chart |
News |
PowerRating) has pushed above its pivot after an initial failure.
All in all, buying breakouts with the
hope of any sustained move has been very uncertain over the past few months. Add
the recent market distribution on top of that and it may be a very difficult
proposition to compete with simply spending a little more time in cash. At this
time, I’d be focusing on two things:
- First, an improvement in the major
averages and preferably a follow through day to indicate institutional
accumulation. - Second, I would like to see a
little better success rate in strong companies that are breaking out of
solid bases.
Hang in there, if you are patient, it
will come!