This Stock Reversed On Its Heaviest Volume Ever

  • February 3, 2004
  • Tim Truebenbach

While
I remain bullish on the stock market,
I have to admit that it has been crazy out there over the last week. We saw
the leading Nasdaq and S&P 500 post distribution on 1/27 and 1/28, followed
by support on 1/29.

image src=”https://tradingmarkets.com/media/2004/Tim/tt020304-01.gif” />

image src=”https://tradingmarkets.com/media/2004/Tim/tt020304-02.gif” />

A sigh of relief is in order
after we have seen the indices close on tight consolidations and low volume
over the past couple of days.

Growth stocks present an
exponential twist to the correction we have been seeing for a week and a half!
Taser
(
TASR |
Quote |
Chart |
News |
PowerRating) broke out of
a flag pattern on 1/9 and may have just completed a climax run as it reversed
today on its heaviest volume ever.

image src=”https://tradingmarkets.com/media/2004/Tim/tt020304-03.gif” />

SOHU

(
SOHU |
Quote |
Chart |
News |
PowerRating) produced earnings that were in-line with estimates, but guidance
was not as high as the stock price needed. Problem solved! Investors are now
looking at this stock with a P/E of only 46, or only 1.6 times the S&P 500.
This is not very high for a stock that just punched out quarterly earnings growth
of 367%.

image src=”https://tradingmarkets.com/media/2004/Tim/tt020304-04.gif” />

^next^

I’ll admit that I
like this group, but these moves are causing some doubt as the stocks fail to
hold key areas of support, such as SOHU’s 50- and 200-day moving averages.
SINA
(
SINA |
Quote |
Chart |
News |
PowerRating) is the next name
on the docket and after seeing the Yahoo!
support for this company, I have to think there is something worth owning this
company over. SINA earnings are due out this afternoon, following its sympathy
sell-off for SOHU.

image src=”https://tradingmarkets.com/media/2004/Tim/tt020304-05.gif” />

At this point, it is important
to pay attention to the growth stocks that have broken out and have held support.
Netflix
(
NFLX |
Quote |
Chart |
News |
PowerRating) has done this
along with Invitrogen
(
IVGN |
Quote |
Chart |
News |
PowerRating).
Even though most stocks are running into some trouble, it will be profitable
to find the one’s that have not if this market is to continue higher.

World
Acceptance
(
WRLD |
Quote |
Chart |
News |
PowerRating) is another name that threw a solid curve
ball last week as it got pounded below its 50-day moving average on heavy volume,
only to recover on even heavier volume.

image src=”https://tradingmarkets.com/media/2004/Tim/tt020304-06.gif” />

This is a market that has
required two things to make money and it appears as though this continues: diligence
and patience. Continue to research strong companies that are fundamentally and
technically superior while patiently holdings the positions that do not fail
to meet these conditions.

Good Trading!

Tim Truebenbach

timt@tradingmarkets.com