If you want to go long, watch these 4 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 stock market continues to put on a dazzling display of
confusion as we saw nothing worth talking about over the past couple of weeks
only to be followed by a strong accumulation day on Tuesday.
Volume swelled to over 2 billion shares on the NYSE while the NASDAQ volume
increased but remained below-average. In recent weeks, leading stocks such as
Tradestation
(
TRAD |
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PowerRating) have been failing to hold key areas of support. Selling
pressure has been intense while the major indexes have remained just beneath
multi-years highs. The Dow and S&P 500 closed at new multi-year highs after the
strong buying on Tuesday, but leadership still remains in question.
It is very tough for companies like Intel
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INTC |
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higher when so many shares are owned at higher prices. This is called overhead
supply and as the price rises, it is more tempting to find sellers. When we talk
about leadership, we are talking about companies who have most likely gone
public recently and are growing their earnings at an accelerated rate. These
stocks are usually at or near new highs and very capable of attracting continued
money inflows from large investors. These companies are either large like a
Google
(
GOOG |
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PowerRating) or they can be smaller-cap names such as Meadow Valley Corp
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MVCO |
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PowerRating).
In either case, the businesses are usually improving rather than running into
major obstacles.
It is a good thing to see the market push higher on heavy volume, but we now
need to see more and more leading names follow suit. The action has been fairly
listless for the past ten days and slow, boring trade is one way a market can
tire out investors’ patience. With the strong action on Tuesday, it will be
important to pay close attention to where profitable trades may lie and in which
sectors. Medical, Biotech, Investment Management and Construction have been
acting well and may be places to begin. And, if nothing appeals to you this has
not been a good market to force the issue. March Madness begins this evening and
may very well provide a great distraction for anyone looking for some action!
Enjoy your Trading!
Tim