Prove It!

It’s not
our job to buy stocks all the time
and force the market to hand over
profits. Our job is to properly evaluate when the market is conducive for
investment and then take advantage of it, while keeping our risk in check. That
is why, in the current market, I say that both the market and stocks breaking
out need to prove themselves simultaneously. The market needs to show only
positive signs, like rallies on heavy volume, and signs of accumulation. Keep an
eye out for a 2% or greater move higher in a major index on very heavy volume.

This market may very well have marked
the bottom. While quite a few stocks have broken out over the past couple of
months, unfortunately, very few stocks have broken out to return investors a
profit. If this market is the beginning of a bull market, not only will stocks
continue to break out, but they will succeed a majority of the time. That is the
second necessary element for a market conducive to investment.

Resmed
(
RMD |
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broke out on volume
90% above-average yesterday.

Idec Pharmaceuticals
(
IDPH |
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moved
through a possible pivot, but lacked any volume to back the move. The stock
continues to build its base.

Ryland Group
(
RYL |
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is attempting a
move toward its pivot, 63, as I write this. NVR
(
NVR |
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has already moved
through a double-bottom pivot, but not yet in a successful fashion. 

Schuler
Homes

(
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has also moved through a pivot point at 17.80 on heavy volume,
but is far from being labeled a huge success. It is positive to see an entire
group make a move like this, but it will be important to see how large the move
is.

American Woodmark
(
AMWD |
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is
working up the right side of its base, and also finds itself in the building
group.

Stocks continue to set up and build
their bases. As this continues, I will continually watch for success stories as
I really want to see things prove themselves much more than the breakouts we
have been seeing over the past two months, before jumping in.

Cheers,

Tim