Signs Of Strength
There is very
little to tell about the market
right now, which is not a problem. Our interpretation simply needs to stay the
same since nothing has appeared to change. The major averages did show signs of
distribution, but not enough to take action. The S&P
500
(
$SPX.X |
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PowerRating) and Nasdaq
(
$COMPQ.X |
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PowerRating),
as seen below, have been rallying on lighter volume, but again, do not cause us
to take any kind of action. On the positive side, the Nasdaq is standing strong
at its 200-day moving average, a sign of strong institutional support.
For the past 2 ½ months, the major
averages have given the “all-clear” to move on to the stock-selection
phase. This latter phase is where things have been tough and confusing. The
simple truth is that very little has been successful in the way of growth stocks
breaking out. Bradley Pharmaceuticals
(
BPRX |
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PowerRating), Multimedia Games
(
MGAM |
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PowerRating),
PEC Solutions
(
PECS |
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PowerRating), NVR Inc
(
NVR |
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PowerRating) and a
few other stocks have managed successful breakouts. For these select companies
that have had the ability to advance, there have been scores of stocks unable to
build on their initial breakouts.
Bioreliance
(BREL) was the latest casualty to bust through its pivot of 33.45 only to fall
apart without strong institutional support.
The only sure-fire strategy that has
been working under I-T time analysis is that every stock that has set-up,
eventually moves on to break out. To trade this, you would have to do exactly
that, trade. What each investor does is up to them, but even if you moved into
these stocks before the breakout and then sell into the breakout, the gains have
been limited to no more than 20% or so. My goal is to be patient and wait for
the longer-term move when the environment is ready.
In the meanwhile, stocks continue to
build bases. As the weeks and months progress, all things being equal, these
stocks will complete their bases and be ready to successfully move higher. Christopher
Banks
(
CHBS |
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PowerRating) is working through a multi-month base.
Fair Isaac
(
FIC |
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PowerRating) has worked its
way up the right side of its base.
Krispy Kreme
(
KKD |
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PowerRating) continues to hang in there, as it builds a handle on its 6-month base.
Former glamour from the 90’s and the
type of stock most investors like to see when things start to get going is Peoplesoft
(
PSFT |
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PowerRating). The stock is working the way up a double-bottom base. The first low
is 17.50 and the second is 15.78 with a pivot of 51.10.
The quantity of setups is a little
light but I imagine that will change as the market shows strength and hangs in
there in the weeks and months ahead. As one email pointed out: “I’ve
already been waiting around for 18 months, what’s a couple more?”
Cheers,
Â