Keep Following Your Rules
I read Gary’s
column today, and I don’t care what I think either! That is a
great thing — since I am probably one of the worst people at being an emotional
sucker at market bottoms and tops! Through the month of October 1998, I was
about as negative as an average Joe could be, but by following the rules I had
laid out for myself, spotting the confirmation in the indices and very
hesitantly buying into Yahoo!
(
YHOO |
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PowerRating), I noticed my account rapidly rising,
and eventually my opinion changed. The important thing is not to follow your
opinion or how you may “feel,” but rather a proven set of rules.
I have doubted the current rally every
point of the way as there were no breakouts to speak of, then failing breakouts,
now only a few successful breakouts, and who knows what next! But the facts are
there and solid rules need to be applied in order to not get hurt and make sure
that we can get on board a potential bull market. First off, as I mentioned in Tuesday’s
column, the market and its surrounding sentiment indicators have acted
almost perfectly since the bottom in late September.
Similar to the 1970s, it may take a
while for growth stocks with strong fundamentals to successfully launch into
stellar runs. This aspect remains to be seen, but contrary to the past few
weeks, a few stocks have managed to successfully launch from sound bases: Epiq
Systems
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EPIQ |
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PowerRating), Krispy Kreme
(
KKD |
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PowerRating) and PEC Solutions
(
PECS |
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PowerRating) are
three examples. I know without saying this, I will be getting a few e-mails, so
here goes: Although these stocks have moved higher, they
have done so with less conviction than we are used to, just as one would expect
following such a severe bear market and heavy “fear factor” by most,
if not all, investors.
As I previously mentioned, there are
still few candidates to track, but if this market is the beginning of a new bull
advance, more will assuredly follow in the weeks and months ahead as stocks
continue to build their bases every day. Idec Pharmaceuticals
(
IDPH |
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PowerRating) is one
such stock as it failed to come through with a volume-backed breakout on
11/13. It continues to push towards its high of 75 and may stop along the way to
form a low-volume handle.
I am excited as the weekend approaches
because it will give me a chance to go through my weekly in-depth analysis of
the markets and leading stocks. The market appears to be firming up, but this
could change for better of worse very quickly and it will literally pay to be
aware of this.
Have a great weekend as we approach a
shortened holiday week!
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