To Move Higher, We Need These 2 Factors

March 2, 2004
Tim Truebenbach

We started March on a positive note, with a nice
rally and stocks breaking out and moving higher. Then, one
day later we have already run into trouble.

If you take a close look at the volume and price of
todayâ€™s trading, youâ€™ll notice we have just logged another distribution day.
If you are not familiar with this term, it is evidence that large
institutions are selling stock and is identified when an average closes down and
volume increases from the previous day. In the past 10
trading sessions, we have seen 5 of them produce distribution days. Based on historical precedence, that is enough to topple any rally.

Can this market uptrend continue after so much
distribution and pulling back? Of course it can. The
primary point I want to convey right now is that the odds do not appear to be in favor of
our buying stocks. Up until 5 days
ago, we had very little to look at or even go after in the growth stock arena. Petroleum
Development
(
PETD |
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PowerRating) broke out of a nice little 8-week cup and
handle base to new highs. In only a few short days, it
appreciated 20%. It is currently showing strong support and
the willingness to continue higher.

Helen of Troy
(
HELE |
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PowerRating) followed suit and broke out on
above-average volume yesterday. Today, the stock handed back
a bulk of the gains and closed below its pivot point of 30.90â€¦not a good
showing. On a positive note, volume was much lighter than
during yesterdayâ€™s breakout day.

Online travel agent, Orbitz

(
ORBZ |
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PowerRating) went public in
December and has since been consolidating its recent IPO.
The stock has been attempting to move higher, but may face some trouble with the
current technology and Internet slump.

Another stock that broke out on Monday has managed
to barely hold its Buy or pivot point of 17.58.
Scientific Games
(
SGMS |
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PowerRating) is in an attempted rally and has been on the growth stock radar.

My trading service has had no shortage of
recent setups, but as I have described above, the environment remains very
choppy and possibly outright dangerous. It is definitely a
good time to insist upon some accumulation in the market and better action out
of growth stocks. Without these two factors, Bull Markets
have a lot of trouble moving higher. Fortunately, things
could be a lot worse. We do have many factors that lend to
this being a correction and nothing more severe. After all
of the recent selling in the Nasdaq, it only stands a little over 7.5% off its
peak. Ten percent and less is defined as only a correction. There are growth stocks setting up and even moving higher. China remains a very strong pocket
of strength to keep an eye on for future leadership. Remember that strong performer from 2003,
Netease
(
NTES |
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PowerRating)? It
has climbed back above its 200- and 50-day moving averages on strong volume.