Here’s why I think the market could move higher

  • April 4, 2006
  • Tim Truebenbach


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.

…as inflation appears to be under control
and we anticipate no further tightening in the immediate future we have taken to
a neutral bias. This is the kind of HYPOTHETICAL statement from the Federal
Reserve that may knock the market from its slow, choppy pattern. A very positive
earnings season may be another positive catalyst to propel us higher. How is the
current market treating your portfolio? Was the first quarter productive and
profitable? The S&P 500 returned 3.7%, but as anyone who participated in the
action knows, the profits were choppy and mixed, similar to the entire quarter’s
action.

March returned 1.1% for the S&P 500; February returned 0.0%; January returned
2.6%. The action throughout the quarter was choppy, but following leading names
and sectors produced positive results. This say a lot for the market since there
were tons of obstacles to overcome: rising oil prices, rising interest rates
along with uncertainty and uncertain geopolitical concerns. Even with all of
these uncertainties, the stock market rose through the first quarter and is
trading at multi-year highs. We have yet to see enough distribution, or
professional selling pile up to warrant raising a cash position.

Individual stocks have been tough to trade and buying into strength or selling
weakness has not paid off. Take a look at the recent breakout of CBOT Holdings
(
BOT |
Quote |
Chart |
News |
PowerRating).
The stock surpassed its pivot point of 128.10 on 3/21 with above-average volume
only to be turned away and stop most traders out two days later. Since then, it
has managed a 10% rally off its 50-day moving average.

Basic Energy Services
(
BAS |
Quote |
Chart |
News |
PowerRating) is another example of trading through this
uncertain market. The stock broke out of a cup and handle base pattern on 3/31,
only to close below its pivot point of 30.02. Since then, it has managed to
confirm the breakout and is currently trading about 8.5% higher.

Finding a way into this market has paid off. Buying fundamentally strong
companies into any temporary weakness has been profitable. This pattern may
continue until we see a major positive catalyst that ends this uncertain
environment. In my humble opinion, this market is poised to move quickly higher
if we see the Fed release a nice statement like the one we began this column
with! Continued focus on the strongest stocks and sectors will yield the best
results and hard work will pay off. Let’s all keep our eyes peeled for when the
market moves decidedly higher and profits come much easier.

Tim Truebenbach