It Continues To Amaze
First, you may want to browse my
reports from April
11 and April
15…because
it is exactly where I stand after going through the books this weekend.
In case you didn’t know, every Sunday I go through William
O’Neil’s DAILYGRAPHS PRINTED
PRODUCTS. It takes me about three hours. Some Sundays, I go through
them twice…especially if I am starting to see a significant change
in market direction. I did not see any changes
this weekend. But what I am seeing
continues to be amazing. Let’s review.
If you had told me that General
Electric
(
GE |
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(
IBM |
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(
TYC |
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would drop 60%, that Nokia
(
NOK |
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be down to $17, that Merck
(
MRK |
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go from $80 to
$50…not to mention all the TECH carnage, I would
have told you that the rest of
the market had to look like Robert Blake’s future. But that’s not the
case. The rest of the market is still in good
shape. NEW HIGHS continue to stay at strong levels,
more and more setups are showing up, and small and mid-cap,
as well as value areas, continue to hit highs.
In my April
15 report, I mentioned that there was precedent for such a market.
I am just amazed by the fact that this is actually going on. Imagine
all the leading stocks of the past ten
years…the ones all investors are conditioned
to talk about, hear about, as well as invest in continuing to come
apart at the seams while a crop of stocks that
were completely forgotten about
are coming to the forefront. Hey, that’s why I turned to technical
analysis. This is all good, but has to come
with a caveat. It’s called lowering
the bar.
I just finished my Nasdaq list of stocks in good technical
shape. It’s basically a bunch of
secondary names…it’s basically a bunch of lower–priced
names…it’s basically a bunch of low-volume traders. I have never been
an advocate of buying stocks that trade 50,000 shares/day. Try getting
out when things go wrong. It’s like the Three
Stooges heading for the door at
once. NYUK! NYUK! NYUK! I loved Curley.
So, if you want to see what I am seeing…take a look at Ashworth
(
ASHW |
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Chart |
News |
PowerRating) which trades 55,000/day…
Or GumTech
(
GUMM |
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PowerRating) which trades 33,000/day…
Or Horizon Organic Holding
(
HCOW |
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News |
PowerRating) which trades 42,000/day.
Certainly, there are higher priced stocks that are
working…certainly there are
stocks that trade more volume that are working. I just wanted to make
sure you knew what was getting the lion’s
share.
The best way for us to look at the NYSE-type stocks is to
just look at some individual
names that are setting up to break out.
Harley-Davidson
(
HDI |
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PowerRating) closing above $57.25.
Comerica
(
CMA |
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above $65.
Sears Roebuck
(
S |
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PowerRating)
above $55.20.
I would like to see St. Jude
Medical
(
STJ |
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PowerRating) put in a handle.
New York Times
(
NYT |
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News |
PowerRating) above $48.75.
Moody’s
(
MCO |
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Chart |
News |
PowerRating) just
about there.
Sectors that can be exploited on the upside are HMOs…but
a little extended, REGIONAL BANKS, SAVINGS
AND LOANS, BEVERAGES (ALCOHOLIC
and NON-ALCOHOLIC),
TOBACCO, GOLD, OIL
& GAS, INSURANCE.
Sectors that should be avoided…you guessed it…are TELECOM
(almost across the board),
NETWORKING, COMPUTERS (SOFTWARE,
STORAGE, SERVICES), AIRLINES
and BIOTECH
(but a little oversold).
Lastly, while it is still important to watch the action in
the major indices that I mention
each week, more and more, it is becoming apparent that the small
and mid-cap “value” areas continue to ignore any damage being done.
Until I see a change…go with it…but I
will be watching closely for chinks
in the armor. I say this because sentiment is
overly bullish here. Not too many
strong rallies ensue when my indicators flash warning signals.