Ignore The Noise
Good weather,
barbecues, spending time with family and friends — and then we have
the stock market to deal with. As I write this, the market appears to still be
on vacation from the Fourth. Friday came in with a huge rally; Monday saw the
market wipe out much of the rally; and today we are doing the only thing the
market has yet to do: nothing, as it remains flat on the day, at 1 PM EST.
At this point, we are looking for a
confirmation on the rally that began on Friday. A confirmation would be a 2%
rally in one of the major indices on heavier volume than the previous day. The
earliest I would accept such evidence of institutions buying stocks would be on
Wednesday. On the flip side, if the market were to trade below the lows of last
Wednesday, then this rally would end.
If we were to see a new rally begin,
stocks from the consumer, defense and leisure sectors would most likely lead the
way.
Christopher
and Banks
(
CHBS |
Quote |
Chart |
News |
PowerRating) began another push higher with yesterday’s
announcement that it is going to begin trading on the NYSE July 17. The stock
has held strong through all of the recent selling and comes from the leading
Retail-Apparel/Shoe group.
The building-residential/commercial
group is also showing good strength. I look at stocks in the group such as NVR
(
NVR |
Quote |
Chart |
News |
PowerRating) and Ryland
(
RYL |
Quote |
Chart |
News |
PowerRating) and the
charts do not look that impressive at first glance. But the important thing to
realize about a stock that is working through a base is that the finishing
touches that lead to a pivot point can happen in a very short amount of time.
As we move through the uncertainty of
accounting fraud, earnings worries, terrorism and whatever else the media can
throw at us, it’s important that we ignore this noise and focus solely on
interpreting the market through its daily price-and-volume action. Spend the
extra time following the leading groups and the leading stocks within those
groups. Then you will be excited to buy those stocks when the time comes,
because you will already have a feel for how they act.
Until Thursday,