Look Around The Market And Identify Names That Are Acting Healthy
The market continues to wade through what appears to be an intermediate-term correction amid a longer-term bull move higher.
In the past three weeks there has been less-than-favorable action out of just about every stock. Names like Ebay, Bebe, IBM, etc have been dropping. The selling has been fierce with little reprieve. It feels as though one could throw a dart and identify something to make money on from the short side.
Corrections are known to take a market down 8-10%, and this one will probably be no different. Before today’s action, the NASDAQ was about 8.5% off its peak. The index’s 200-day moving average is not far away and provides the next line of defense.
In the meanwhile, it is best to look around the market and identify names that are acting healthy. It’s very tough to find stocks that have not dropped, but you can look for names that are doing so on lighter-than-average volume. Consider groups that seem ready to rally, such as gaming stocks recently represented by Station Casinos (STN). Eventually, we will continue higher and the names that will appreciate the most the fastest will be those experiencing the least amount of selling.
Tim Truebenbach
P.S. Let me tell you where the market is going. Go to www.tradingsubscriptions.com and click on “Truebenbach’s Intermediate Term Trading Service.”