Why this rally may not last
Timothy J. Truebenbach is the
President of True Capital Management and general partner of True Capital
Partners LP, a hedge fund. He uses a disciplined model that trades on the
intermediate-term time frame. For a free trial to Tim’s Nightly Stock Analysis
Report
click here or call
888-484-8220 ext. 1.
The market’s on a tear! We had very little reason to think it
had anywhere to go but down over the past couple of weeks and the fact that most
investors saw it that way is probably why we are rallying.
This rally was confirmed well after it began which does not usually bode well
for its chances. We have also yet to see many quality growth stocks capable of
leading things higher. Names like Novatel
(
NGPS |
Quote |
Chart |
News |
PowerRating) are about all we
have found and they are far from resembling something one should invest in.
Since the follow-through came on the 21st day of the rally, it’s important to be
very leery of its success. With very few names to go after and a rocky start to
the rally, it may be a good idea to wait for further confirmation. For example,
if stocks continue setting up in weeks to come we may have a true, bona fide
rally underway. On the other hand, if more distribution creeps in, we may just
have a market rising until everyone sees a price they wish to sell into.
Technically, we are in a confirmed rally but treading with caution.
