Much Ado About Nothing

Bouncing, choppy, crazy
action
that can only be interpreted one way: Amazing! When I actually
stepped back from trying to look at the market and analyze what was going on, I
began thinking that it is truly amazing that a market as large as the U.S. stock
market, with so much capital either in it or on the sidelines, is able to
literally go nowhere right now. I realize it’s easy to tell one person’s
intentions and if they decide to sit tight and not buy or sell, but stay in cash
or hold a position, but it is entirely different that one could envision an
infinite number of participants doing the same thing, which appears to be very
little right now.

The Nasdaq moved ahead yesterday on good trade
providing another confirmation of the rally I believed we are in which began on
July 11.

The only problem is that there are no stocks to
jump into. (Maybe this is not as much a problem as a sign.) I could not sleep
last night, so I looked at about 300 stocks which have decent fundamentals and
are near all-time highs, and I only found a couple of stocks that would stretch
my rules if I bought them, which I don’t see happening. For the curious
investors out there, they were Corinthian Colleges
(
COCO |
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PowerRating)
, Pharmaceutical
Product Development
(
PPDI |
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, FEI Company
(
FEIC |
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and U.S. Physical
Therapy
(
USPH |
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.

COCO has been building a nice base up until July
27, when it began jumping all over the place. PPDI looks good, other than the
worry I have with earnings because of its growth in the quarter ending December
31, 2000. FEIC has me a bit worried about its group strength, although it has
obviously had a phenomenal run over the past seven days. Usually we’d like to
see a potential leader like FEI break out at the beginning of the sector’s run,
not after its been going on for a while. Lastly, USPH looks good, other than a
few distribution days it put in on July 30 and 31, although they did come on
below-average trade.

Cantel Medical Corp.
(
CNTL |
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is working
through an eight-week base and sporting solid fundamentals. Amsurg Corp
(
AMSG |
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is working through an ascending base and has formed a six-week cup on top of its
previous base. Laboratory Corp.
(
LH |
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stopped a nice 31-week cup 15 cents
under its all-time high to possibly work on a handle. MDC Holdings
(
MDC |
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is
working on a handle, which has thus far corrected the maximum 15% investors
would usually like to see. Resmed
(
RMD |
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is working through the right side of
a 13-week cup. Theragenics
(
TGX |
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is building a low-level handle on the right
side of its cup. Diagnostics Products Corp
(
DP |
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has moved to the top of an
eight-week cup in hopes of forming a nice, perfectly downward-sloping handle on
light volume (or not…be careful of buying early).

Although there are not a lot of setups, the
market has shown signs of accumulation. For this reason, if setups do occur and
take out the pivot point on volume, it would be possible to participate.
Americredit
(
ACF |
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News |
PowerRating)
is a recent example of growth working.

At this time, it is extremely important to only
consider extremely solid companies that have also built ideal bases. With a
market that is this choppy, investors will want as many of the odds on their
side as possible, and these are factors we can control. Other factors to
consider in reducing risk would be using cash accounts, not margin, and always
cutting losses at no more than 8%.

Please let me know if I have missed anything, or
if there were anything else you would like to see me address, (just click on my
name for the e-mail address.)

Have a great weekend,

Timt@Tradingmarkets.com