Time To Let Things Unfold
The lack of
conviction that I have been speaking about the past few weeks does
not change when people start leaving for a holiday. With the market trading in
some sort of range, and very few growth prospects apparent, it is time to sit
back and let things unfold for us.
The Nasdaq has showed signs of
accumulation, but there are very few stocks ready to break out of the gates. At
the least, we know the market can work for us if stocks begin to present
themselves.
History shows us the best path of what
to follow during the current market. In 1933, 1982 and 1987, the major averages
remained in a trading range for a number of months following the major
corrections that had just ended. After the period of consolidation, the market
made a healthy advance in which growth stocks moved to the forefront.
Now is a time to sit back, check the
charts on a frequent basis and wait for something to tip its hand one way or
another. If stocks start setting up, then look to buy them as they break out of
sound bases with strong volume on the day of the breakout. If the major
averages start posting days of distribution, then keep money in cash.
The recent Nasdaq follies and light
holiday trading definitely will not help reinforce conviction one way or
another. If anything, they are evidence of the lack of conviction, because when
illiquidity presents itself, it is easier to determine a trend if there is one
established.
In my research, I have only found
three stocks worth taking another look at: Advent Software
(
ADVS |
Quote |
Chart |
News |
PowerRating), Planar
Systems
(
PLNR |
Quote |
Chart |
News |
PowerRating) and Serena Software
(
SRNA |
Quote |
Chart |
News |
PowerRating). Nothing very spectacular to
say about them, but I am always asked for some names by the “action junkies,”
so here they are!
Have a wonderful day off and enjoy the
holiday that led us to the greatest stock market in the world.
Happy 4th of July!