Right Now, This Is The Key

  • July 17, 2003
  • Tim Truebenbach


If you’ve been following growth stocks over the past few months.
you’ve done very well.  Even though days like we have seen this week are never
easy!  The indices have barely been dodging the distribution bullet and stocks
have been getting hammered.


This
equates to 4 D-days in the last 13 trading days. 

 

This
equates to 3 D-days in the last 13 trading days.

We escaped intact as far as a healthy
market in technical terms is concerned.  Leading stocks and basically anything
from the growth sectors have been getting pounded on. The opening prints from
two names described market sentiment best. 
Boston Communications
(
BCGI |
Quote |
Chart |
News |
PowerRating) and
Sandisk
(
SNDK |
Quote |
Chart |
News |
PowerRating). SNDK
blew away expectations and opened up 1.38, while BCGI disappointed and opened
down 7.48.  That is all a growth investor needs to know going into the rest of
the session as profit-takers came for almost every name, from
Hi-Tech
(
HITK |
Quote |
Chart |
News |
PowerRating) to
eBay
(
EBAY |
Quote |
Chart |
News |
PowerRating).



The key right now is to
hone in on which stocks are retaining their leadership role and which ones are
finished. I gave examples of HITK and EBAY above for the reason of also
showing a graphic example of an unhealthy name vs. one that may be simply
correcting and consolidating after the recent move.

Inevitably, we will see a snapback rally.  It will be important to see if
volume can increase when stocks start to rebound. If they are accompanied by
lighter volume, then that is a big warning sign. 

We are still in a confirmed rally, but there is no need to take on undue risk.
Keep an eye out for unusual strength, and make sure stops are honored. We’ll
keep an extremely close eye on the overall market’s price and volume action.
If we continue to see declines on heavier volume, then new purchases should
stop. We are already seeing many leaders get hit on heavy volume which may be
the first warning sign.  For now, manage current holdings closely and watch
for signs of strength.

Have a good weekend,

Tim Truebenbach