The Trend Is Key
It’s
back! (Or is it?) The market has sent nothing
less than a mix of confusing signals. Wednesday marked accumulation following
Tuesday’s distribution.
\
The key in following any confusing
action is picking the trend out of the equation. Recently we saw a rally begin
and a follow-through. Until we see enough
distribution it is important to follow the evidence we have already been given.
Individual stocks continue to hold
back as the setups have been far and few between. Fortunately, a few names seem
to be appearing on my radar. Autozone
(
AZO |
Quote |
Chart |
News |
PowerRating)
reported solid earnings numbers on Tuesday regarding the fundamental side. On
the technical side, the stock was able to bounce nicely off its
50-day moving average. Its success remains to be
seen as it is attempting a break through the buy point of 80.10 as I write this
on heavy volume.
Christopher
Banks
(
CHBS |
Quote |
Chart |
News |
PowerRating) was able to hold above its 50-day moving average as
the entire retail group faced some selling earlier this week. Many of the retail
stocks such as Kohls
(
KSS |
Quote |
Chart |
News |
PowerRating) and
Coach
(
COH |
Quote |
Chart |
News |
PowerRating) rallied off their recent
declines as well. It will be important to see how volume shapes up for these
stocks as they rally. Strong volume would indicate continued buying interest,
whereas a weak rally might spell trouble for the group. The reason I focus on
these is that they have been market leaders of late.
The homebuilding group is another one
to watch. NVR
(
NVR |
Quote |
Chart |
News |
PowerRating) came rather close to
its 50-day in a successful test of that support level.
Ryland
(
RYL |
Quote |
Chart |
News |
PowerRating) is holding well above the trend line.
Meritage
(
MTH |
Quote |
Chart |
News |
PowerRating) took a dip below the line,
but has since recovered.
As the current rally continues (if
that is what it can be called), more and more stocks are working on new bases.
Many of these names are unknown, and others are popular stocks that we have seen
before. One such name is Anthem
(
ATH |
Quote |
Chart |
News |
PowerRating).
This stock has some base-building ahead of it, but for the time being it is
three weeks into a new base and possibly setting up as a potential winner with a
solid entry point.
Things have been quiet, but that is
never the time to assume that they will continue to be so for very long. Keep
track of the current market and of individual leaders, but don’t overwhelm
yourself in analysis. When you see something set up and it looks right, go after
it.
Good Trading,