Looking For Follow Through
The
market has been anything but good.
September saw the S&P 500
(
$SPX.X |
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Chart |
News |
PowerRating)
and Nasdaq
(
$COMPQ |
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PowerRating) drop by over
7%.
Most of the price-and-volume
action that we have seen and I have written about in this column has pointed
towards lower prices. Whenever we
come across distribution in the market, it’s very important to allow our
portfolios to move to the sidelines, as they should have been for most of
September. On Monday, the major
indices took out their recent lows, thus killing the previous rally attempt.
From today on, (assuming we close positive) we begin looking for the
follow-through day all over again.
Certain groups and
individual stocks have shown some willingness to lead during the recent
declines. The school stocks come
to mind. Today, I am watching two
of them take this brief opportunity to push higher.
Career Education
(
CECO |
Quote |
Chart |
News |
PowerRating) and Education
Management
(
EDMC |
Quote |
Chart |
News |
PowerRating) are both making
moves to new highs on heavy trade.
Unfortunately, two
of the group’s early leaders, Corinthian Colleges
(
COCO |
Quote |
Chart |
News |
PowerRating) and Apollo Group
(
APOL |
Quote |
Chart |
News |
PowerRating)
broke to new high ground a month ago and have not been able to spring higher
since. If this rally is for real,
this group may stand a real chance, but that is a big if and the main reason
why we wait for confirmation of a rally before
making any new purchases.
The earliest the
market can confirm this newest rally will be on Friday.
If things still appear sound, I will be back on Thursday with some
names that I have been watching.
For now, stick to
the rules and focus on preserving capital for the next real opportunity.