These Market Leaders Are Pushing Higher

  • June 17, 2003
  • Tim Truebenbach


Three months after the market put in a bottom
in mid-March Bulls and Bears both have something to argue for. We have seen an
amazing ascent in a short period of time, with supportive volume coming in as
recent as yesterday, (positive days in the major averages on heavier volume
than the previous day indicate accumulation).  On the bearish side, the Nasdaq
has posted three distribution days (negative day in a major index on heavier
volume than the previous day) out of the past 12 trading days. 


 

Historical evidence has
pointed out that it is alright to see occasional distribution as a market
rises, but when enough of these days start grouping together it can be a
problem. Specifically, 2 more negative days on heavy volume through this
Friday would require me to hold off new purchases and re-assess any current
holdings.  At this time, that is not the case and Buy Mode continues as the
current rally is in effect.

We started seeing some of our leadership take it on the chin today as
USANA Health Science
(
USNA |
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The stock has been one of the most profitable in the market, but recently went
on what could be perceived as a Climax Run.  It posted larger gains than it
had achieved over the past couple of months and volume was its largest ever.


 


Garmin
(
GRMN |
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below its 50-day moving average, a key technical level, on very heavy volume. 
The stock appears be under accumulation as it managed to close in the upper
quartile of the day’s range and a hair above the 50-day MA.


 

Many of the other leading
names have been pushing higher without any real consolidations or
corrections.  EBAY is such a name as it is attempting to form a legitimate
flat base that began on 5/28.  We’re sitting at 15 days into it and we’ve
already seen Ebay trade a mere 30 cents away from the high.


 

Other internet names such as
Amazon
(
AMZN |
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Yahoo!
(
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over recent days, although they have not seemed to exhibit the same strength
as Ebay.

United Online
(
UNTD |
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push higher after a solid breakout on 6/2.  Today’s move came on slightly
above-average volume.


 

From the leading Medical
Sector, Genprobe
(
GPRO |
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recent consolidation for the past several weeks.  After a couple of attempts
today, 6/12 and 6/6, the stock has not been able to surge higher, but its
action has still been constructive.  The company still sports triple-digit
earnings growth, increasing ROE and solid sales.


 

Besides Internets and
Medicals, the homebuilding group has been providing additional market
leadership.  I have been following Ryland

(
RYL |
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(
HOV |
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(
BZH |
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Meritage
(
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up any ground.  This group made a nice surge towards the end of May and is
still worth watching for future entries as the strength certainly seems to be
there.

If you have been buying stocks since the market started flashing signs of
accumulation several months ago, then you are in a position to be picky and
insist on only the best set-ups.  If you have been waiting it out on the
sidelines, now is the time to seek out very solid growth companies that are
showing solid accumulation.  Look for brief consolidations to enter a position
in leading stocks or leading ETFs such as the
Internet Holders
(
HHH |
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(
QQQ |
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PowerRating).  Until the market’s price and volume says differently, it is
important to recognize that we are in an uptrending market and most things
will move higher.

When initiating new positions, always limit your loss to 8% and try to move
into stocks as they emerge from sound price consolidations on heavy volume. 
Stocks that are currently setting up include American
Pharma
(
APPX |
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(
EBAY |
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J2 Global
(
JCOM |
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PowerRating), Vital Images

(
VTAL |
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PowerRating), Ask Jeeves
(
ASKJ |
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PowerRating), Integra
Lifesciences
(
IART |
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PowerRating) and many more.

Good Trading and see you Thursday,

 


Tim Truebenbach