Still On The Prowl
Woe is me! As
I write this, I am watching the market face obvious distribution as all three
major indices are down at least 1% and volume on the NYSE and Nasdaq is coming
in heavier than Friday.
Unfortunately, with the sloppy
follow-through we saw along with distribution finding its way into the mix, we
may face a failed rally over the next few days. I will be looking for evidence
of a failed rally in either constant distribution days or if the indices were to
take out their lows of the recent rally.
For reference, the lows are as
follows: Dow Jones, 9807.69; S&P
500, 1049.06; Nasdaq, 1560.29.
As stated above, I am writing this and
deriving this analysis from an intraday perspective. If the market is able to
rally into the close and avoid a distribution day, that would be extremely
bullish.
Going to my second primary indicator I
turn to individual stocks and breakouts that have gone on to succeed. The
following is a recent list of successful breakouts: __________, __________,
and ___________, (these lines are blank on purpose)!
Very few stocks have set up at this
point and even fewer have broken out. Autozone
(
AZO |
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PowerRating) is a recent breakout that has succeeded thus far, but is only three
days into it. It will be interesting to see if the stock can pull back or
consolidate on lighter trade. AZO would also indicate strength if it can hold
near or above its pivot of 80.10.
I previously mentioned that each day
stocks are setting up. Over the past weekend, I found a number of examples.
DR Horton
(
DHI |
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PowerRating), Ryland
(
RYL |
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PowerRating),
NVR
(
NVR |
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PowerRating) all come from the leading
homebuilding group and have paused to consolidate recent gains. I am currently
visiting Denver, Colo., and I have to admit, although irrelevant to actual stock
analysis, Ryland and a few others are building homes as if were no tomorrow. I
have also recently learned that Beazer
(
BZH |
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PowerRating)
is about to build 6,000 homes in the Sacramento, Calif., area. As I said, this
does little for how a company should be analyzed vs. actual EPS and growth
rates, but I thought this was very interesting even after
the recent run these companies have had.
Websense
(
WBSN |
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PowerRating)
and Paypal
(
PYPL |
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News |
PowerRating) are two stocks that
are working through their bases in the Internet sector.
For now, we will have to keep our eye
on the market and see which direction it decides to take. As we follow the
averages, it never hurts to be on the prowl for potential stocks.
Until Thursday,