The One Simple Thing I’m Watching For
There
are two ways to look at the market right now: trying to decide
which direction it will take or using solid evidence to put the odds in your
favor. Since the market began its
latest decline, we have yet to see it produce overwhelming accumulation.
 
Regardless of one-day rallies
or days where the market falls on heavy volume, I am watching for one simple
thing: a rally to begin and 4-7 days later be followed by a nice, 2% increase
on heavier volume than the day before. Every
Bull Market, (and most bear market rallies) starts this way.
When I see this, I’ll believe that it is less risky to buy individual
stocks and ETFs on leading sectors.Â
A rally began last Friday but
has failed to follow-through with the 2% gain.
Does this mean it will not happen? Absolutely
not, but most times it takes longer will result in a weaker rally.
If this does happen, it will be important to insist on leading stocks
with excellent fundamental and technical traits.
Buying stocks ahead of this confirmation is almost the same thing as
betting on the overall market with very little evidence to back it up.
For example, Cognizant
Tech
(
CTSH |
Quote |
Chart |
News |
PowerRating) has been attempting to move higher.
It did so today as the market got off its back.
Stocks like this one may very well go on to form a handle if the market
can stabilize.Â
 
Boston
Communications
(
BCGI |
Quote |
Chart |
News |
PowerRating) is another name I have watched chop
around, waiting for the market to make up its mind.
Â
Dick’s
Sporting Goods
(
DKS |
Quote |
Chart |
News |
PowerRating) has been unable to make any upward
progress following a good breakout on 2/21.Â
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The bottom line is that
playing stocks without the market’s trend behind them can be futile.
Once we correctly identify the trend us higher; we are free to make
money at will. Until that point comes,
capital preservation is very important.Â
We are in the midst of a
potential rally awaiting confirmation, so the best thing to do is search for
solid stocks for the watchlist. Omnivision
Technologies
(
OVTI |
Quote |
Chart |
News |
PowerRating) is setting up and hails from a group that
has been trying to reclaim its role in the top quartile.
Â
Some of the internet stocks
are worth keeping an eye on. Big-cap
names that this list may include are Ebay
(
EBAY |
Quote |
Chart |
News |
PowerRating) and Yahoo!
(
YHOO |
Quote |
Chart |
News |
PowerRating).
Now is a great time to be
prepared but act with caution. Spend
extra time doing the research and then checking it twice.
Ignore opinions about the world stage and focus on the market’s price
and volume action.
Until Thursday,
Â