Whoa!
Where
does this market think it’s going? Are things really this ugly and Nasdaq
1600 is the next stop? Maybe, maybe not…as investors that are striving for
success, all we have to do to succeed in the market is buy proven companies when
the market is under accumulation. The current rally is still in effect, but
there are very few viable set-ups to buy without stretching the rules.
If the Nasdaq takes out its low of the
rally that began on July 11, it will be time to become defensive and stop
stalking new buys. The S&P 500 has already taken out its low of July 11 and
this is indicative in the number of stocks setting up to be bought.
Green Mountain Coffee
(
GMCR |
Quote |
Chart |
News |
PowerRating) and SRI
Surgical
(
STRC |
Quote |
Chart |
News |
PowerRating) are the two stocks I have seen break out and actually offer
investors some profits. Unfortunately, other stocks have also broken out and
then fallen apart, making it difficult to tell whether these two examples will
continue to hold up.
The only problem with stalking
breakouts is that for the two successful examples, I am able to find others that
have failed much more plentiful. Take recent break out Ivax Corp.,
(
IVX |
Quote |
Chart |
News |
PowerRating).. The
stock pulled back below its pivot of 39.75 yesterday on above-average trade. SEI
Investments
(
SEIC |
Quote |
Chart |
News |
PowerRating) recently tried to break out of a handle of a 30-week base but
has failed and continues to build the right side. Quest Diagnostics
(
DGX |
Quote |
Chart |
News |
PowerRating) is a
prefect example of the lack of conviction. We now have a better understanding
why the stock could not just break higher on volume.
At the first sign of trouble
(fundamentally), the seller(s) come out of the woodwork. And by this, I do not
mean you or even me, but someone that could actually make the volume go from
300k yesterday to over 2 million today. The big guys are not willing to hang in
there, and that’s a bad sign.
Now for the good news, the more the
challenge increases, the better things will eventually get. Cash is king, and
when stocks start going up again, and breakouts don’t look back, we are all
going to want as much money as possible to put into them and leave into them.
Take a look at the following charts for a little encouragement that I found this
week. Keep in mind that these are not “high growth” stocks, and
imagine what something with real growth will do when things heat up again, just
as they did after the doldrums of 1994!
Until Thursday,