Turning On A Dime
The market can turn on a dime, but investors usually
cannot. One week ago I was
writing about stocks that were setting up and about the slight positives in
the market. Today, I am saying
that it is definitely a time to invest with caution. The S&P 500 and Dow have posted consecutive distribution days,
while the Nasdaq has taken the biggest percentage hit.
Direct Focus
(
DFXI |
Quote |
Chart |
News |
PowerRating) was the latest casualty on the growth
arena as it got knocked below its pivot point yesterday on heavy trade.
DRS Technologies
(
DRS |
Quote |
Chart |
News |
PowerRating) pushed through a poorly defined
pivot point of 43.10 several days ago and has since held above it. The stock falls into the Electronic-Military Systems group, which is no
doubt helping its move.
Many of the other stocks that have been working through
their bases have begun to stall. Itron
(
ITRI |
Quote |
Chart |
News |
PowerRating) is an example as it drifts lower.
Although the market has shown us all of these negative
signs, growth has still not thrown in the towel. Stocks that have set up, broken out, and then failed, have not done so
with the ferocity of the past two years. Recently they have been trading back below their pivot points briefly,
before exploding back toward their highs. The action has been choppy and not necessarily ready to invest in, but
it does seem as though it is improving. Christopher
Banks
(
CHBS |
Quote |
Chart |
News |
PowerRating) is up over 3 dollars as I write this and back over its pivot
point of 32.15 to provide evidence of what I have noticed.Â
Only a few short months ago we saw Taro Pharmaceuticals
(
TARO |
Quote |
Chart |
News |
PowerRating) break higher only to fail miserably. Recent “failures†have kept their downside in check much better
than the near past.
JDA Software
(
JDAS |
Quote |
Chart |
News |
PowerRating) has also managed to curb its downside, although it has been
unable to regain its pivot point as I write this.Â
Many of these stocks may set up again and offer re-entry. I have seen this scenario unfold in my investing past, and I always
like to see the stock set up properly, rather than jumping in right after the failure. Allow a new base to form
and a new pivot point to establish itself. Many times when a breakout fails, it needs time to work through the
choppy, loose base it has just created.
The current environment is not handing out profits, but
it is not one we should walk away from. Right
now, I believe it best to keep a close eye on the averages’ price and volume
and stay on the look out for stocks setting up. If growth companies are able to break out, then watch to see how they
act. The market may very well be
working through the drastic declines that it experienced over the past few
years and is not quite ready to offer growth up with acceptable levels of risk
to reward. I will do my best to
pass along my insights each step of the way. As always, I welcome your feedback and questions.
Enjoy your weekend,