In The Early Stages Of A Rally, Here’s What’s Important

  • October 14, 2004
  • Tim Truebenbach


Nothing has changed in the market
based on my views since the report on Tuesday.  WE experienced one day of
distribution, or professional selling on Wednesday, but that does not change
my bullish stance.

 



 

The Chicago Mercantile
Exchange (CME) advanced to new highs on heavy volume today.  This stock
represents ways to play both higher commodity prices (oil and steel) as well
as interest rates.  It broke out in September and has since gone on to a quick
20% gain, indicating a true market leader.

 


 

Google (GOOG) continues to
show strength along with other internets such as Yahoo! (YHOO) and Ebay.

 


 

If you looking to take
advantage of the recent market pullback, you may look at some of the other
stocks that were among the first to break out at the onset of this rally.  MBT,
VIP, PETD and STLD name a few.

 


 

We also continue to see new
names setting up in base patterns.  Aviall (AVL) has formed a double-bottom
base which it has been unable to break out of thus far.  The pivot, or buy
point is 22.21 and the stock is currently finding support at its 50-day moving
average.

 


 

Whatever your style, we seem
to be at the beginning stages of a solid market that may very well move higher
in the upcoming months.  The NASDAQ has been unable to hold its 200-day moving
average on the first attempt, but moves above major resistance can take as
many as three tries before reaching success.  If you have access to a NASDAQ
chart with a 200-day moving average, you will notice that it took several
tries before dropping below this area of support between April 20th
and July 6th of 2004.  I believe we are currently seeing the
opposite as the initial run above it has been made and the time we actually
hold above the 200-day may be one or two more tries away. 

In the meanwhile, it is
important to hone in leading stocks; or those with the strongest fundamental
and technical traits.  The early stages of a rally are the best times to get
invested, but it is important to gravitate towards quality.

Enjoy your weekend!

Tim Truebenbach