Maintaining Composure
The S&P
500 faced a day of distribution yesterday and a controversial day of
distribution on Tuesday. Although the market may face a little selling here or
there, if we see any more of these days in the same week it may spell trouble.
The Nasdaq has still been able to maintain its composure and pull back on
lighter trade.
Stocks in the growth sector have begun
to show flaws. Not that they were ever really able to get going in the current
rally, but many recent breakouts have succumb to selling pressure shortly after
pushing through resistance.
OSI Systems
(
OSIS |
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PowerRating) pushed through its pivot and was unable to close above that very
level on the breakout day. The following day the company presented us with a
favorable order and the stock gapped higher, only to finish the day down. It is
always a bearish sign when a stock closes on its lows for the day and/or it gaps
higher only to close negative.
Land’s End
(
LE |
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PowerRating) pushed through its buy point of 53.10 yesterday. Today the stock opened
at 52 following its earnings release and subsequently sold down to 48.25, or 9%
below the pivot point.
Flir Systems
(
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PowerRating) has been closing in on its breakout point of 50.11 over the past few
sessions. As one of the first stocks to break out as this rally started, it would
not be nice to see FLIR trade or close below its pivot.
Isle of Capri
Casinos
(
ISLE |
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PowerRating) saw an initial move through its pivot on 3/5,
only to be knocked back below it to its 50-day this morning on heavy trade.
Quest
Diagnostics
(
DGX |
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PowerRating) is the last breakout that occurred recently.
The stock moved through its pivot of 74.95 on above-average trade yesterday and
was able to hold onto the move as I write this article.
One point I will mention that I have
been receiving emails on: Only about 40% of stocks that break out on heavy volume
will or should ever return to their pivot points. When I see every stock trade
at or below that point in the days following its breakout, it is a clear sign
that something may be wrong and raises a cautionary sign.
Oxford Health
Plan
(
OHP |
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PowerRating) is one of the few stocks setting up that I have been
watching. The stock is making a push higher as I write this, but is just shy of
its pivot point of 41.05. Additionally, unless volume picks up, the stock may
have trouble with any type of sustained move.
Have a great weekend,
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