Suspicious Bear Bounces
First of all,
let me say that it is a great honor and privilege to join the many
distinguished people that make up TradingMarkets.com. To be included with such
elite traders and money managers is all one can ask for in our business. I hope
I can live up to the high standards that are set every day.
Although the action of the last couple of days can get one excited, I am not.
While I think there can be more upside testing, I am still suspicious. Bounces
in a bear market tend to look good, feel good, and make one want to jump in.
Just look at how many aborted bounces there have been over the past several
months. Monday’s 6% Nasdaq gain was suspiciously void of powerful volume. And if
there is one thing that will tell me that the market is ready to lift, it is a
huge surge in volume.
The market does not hide strong
conviction. There also continues to be a complete absence of proper
consolidations. As I peruse thousands of stocks, I am still finding many that
are breaking down and a ton of wide and loose patterns. Some of these stocks
have 30-40 point trading ranges. This is not healthy. I would love to see some
of these patterns tighten up.
As far as the best potential setups are concerned : Comverse Tech
(
CMVT |
Quote |
Chart |
News |
PowerRating)
looks like it has a decent shot. This is not a new name. It held up well in last
week’s trashing and is already moving back to the top of its base.
Informatica
(
INFA |
Quote |
Chart |
News |
PowerRating) also popped
out nicely on expanded volume.
Another name that is not on everyone’s
list is Planar Systems
(
PLNR |
Quote |
Chart |
News |
PowerRating).
Please note that most breakouts have
failed over the past few months, a definite symptom of a tough market. As
always, and especially in this market environment, keep close stops.
As far as sectors go, medical stocks
(especially HMOs and Hospitals) continue to act well. I am also finding good
technical characteristics in the Restaurant group. These sectors are not as
glamorous as some others, but they are definitely providing a real port in the
storm.