Why I’m Keeping A Piece On The Table
I really didn’t want to write
about another distribution day in the Dow and S&P 500, but that
is what I am doing. Today’s market
showed us that we still need to be very cautious as we have been faced with
distribution in the major indices and failing breakouts.
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We saw Ebay
(
EBAY |
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PowerRating) take out its pivot of 70.95 during trading.
This was one of two breakouts during this new rally and it has
officially failed to materialize.
 
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NBTY Inc.
(
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PowerRating) was the other breakout that has failed
since it made its move back on 1/6. The
stock moved below its pivot of 18.73 today on heavy volume, indicating its
attempt has also failed.
The only breakout I have seen any profits in has been
Marvel
(
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PowerRating). It broke out on 1/6
through the pivot point of a high handle of 9.60 and has not looked back.Â
It stands about a 13% return so far. Unfortunately, if you’re playing things with a 5% stop, it only takes
a couple of these failures to take this small profit away.Â
This is a time to be very cautious.
I have a Yellow Light on my
service. This means that we need to either wait for the Green Light to buy
stocks or move into positions with a smaller position than normal and look to
take profits sooner rather than later. I
do feel it is important to keep a piece on the table in case the new Bull
Market does eventually unfold. I
am on the lookout for a 20% gain in a stock to mark a successful candidate,
but we have not seen this for a while.
As this market has run into trouble, so has the quantity
of stocks setting up to breakout.
Digital
River
(
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PowerRating) remains one of the standalone stocks that is poised to move through
resistance at 15. We’ll keep
our eye on this one in the upcoming days and weeks, because it often pays to
keep track of the triple-digit earnings stories as they set up.
Be careful out there right now.Â
I have spent the last few weeks waiting for setups I have identified
try and pull me into the market. They
have not been able to and I am finding myself with a heavy cash position once
again. This rally still may
materialize and I will watch out for that, but for the time being, there just
are not that many low-risk, high-opportunity trades to take.
I’ll let you know what I find over the weekend in the
column next Tuesday,