Positive Happenings
The markets
have been performing pretty well even though we had a distribution
day yesterday. The bright note is that it came off the heels of the Columbus Day
holiday, and
volume
is typically light on a holiday when the markets are opened.
We also have received some positive
signs over the last two weeks with follow–through
days, rallies even on bad news and today’s nice move up to its best level in
quite a while. Well signals are turning green as we continue to proceed, so we
will begin looking for those momentum plays in those stocks in sectors that are
showing some leadership. Quite honestly I am very excited with all that has
transpired, but am still concerned with the war at hand which could at any time
set us back—but
everyone is aware of this scenario and that is why we use stops on every trade.
Working up the right side of the 6+
week cup is Independence Community Bank (ICBC).
The savings and loan is showing some decent earnings growth (23%, 22%, 29% and
48%) with a 5 year growth rate of 37%.
A potential momentum play is
AmeriSource Bergen Corp (ABC)
which is forming a high level ascending triangle. The medical wholesale company
has exhibited some nice earnings growth over the last 4 quarters, (18%, 17%, 21%
and 21%) in addition to increased sales growth (18%, 16%, 22% and 20%) on a 5
year growth rate of 20%.
Also setting up is foreign bank RG
Financial Corp (RGFC)
which is pulling back and forming a handle to a mini cup along its 20 period
moving average.
Remember that all securities are
risky. In any trade, you should always reduce your risk by adjusting position
size and placing open protective stops where you will sell your long or
cover your short in case the market turns against you. For an introduction to
combining price stops with position sizing, see Loren’s lesson, Risky
Business.
Greg