Archive for September, 2010|Monthly archive page
Heavy selling from banks threatens the broader market pullback.
For the second day in a row financial stocks (XLF) fall below major moving averages. Without the support of this key sector the rally is suspect.
Meanwhile, breakouts from select growth stocks hold up in support of the Bull.
Another seller dominated day gives the Naz its second day of Distribution in a row, while the Dow and S&P drift.
We’re not shifting from our Buy bias just yet. In fact, we’d like to see a gentle broad market pullback give us some better opportunities to scoop up select Growth Stocks that broke out recently.
Any further Distribution, where volume on a down day out numbers the previous day, will make us cautious.
Another concern is the semiconductors (SMH), which have yet to conquer its key 200-day moving average to the upside, and drags heavily on the Bull for its historical tendency to trade closely with the market’s longer term direction.
Our fine rally has hit a round of heavy selling – though nothing to get to excited over, yet.
Seller domination in Tuesday’s action ended with the S&P 500 and Nasdaq posting their first days of Distribution in weeks.
This institutional grade unloading of shares suggests the big boys took some profits.
We want to see the selling dry up to maintain our Bullish bias. More distribution will put us back on defense.
As for Growth Stock breakouts, we haven’t seen it this good in a long time. Ideally, we’ll get a nice pullback to buy in at better prices. Subscribers to our report will get a better fix on this.
Last week’s Follow Through Day, suggesting institutions are on board with a bullish leg in stocks, has been working thus far.
As up-volume outpaces down-volume over the past several weeks we’ve had the confirmation of a number of new highs from our top-ranked and beloved Growth Stocks.
We’re holding our Buyer’s Edge bias until Distribution, or institutional grade selling, shows up.
The S&P 500’s testing of just above its 200-day moving average might pose just the location for some type of pullback to take place.
The key sectors of Financials (XLF), Semiconductors (SMH) and Retail (RTH) all remain below their 200-day moving averages, giving us further indication we’re hardly out of the woods.
September is also notorious for corrections, so hold on.
A round of accumulation for the major indexes goes well for our Bullish bias.
We have no reason to alter our position as the Dow, S&P 500, Nasdaq and Russell 2000 all hold ground above their 50-day moving averages.
New Highs from top-rated Growth Stocks are further confirmation: APKT, ARMH, BAP, HMIN, NFLX, OPEN and PCLN.
These stocks, along with a new crop of potential breakout candidates, were listed in our report for subscribers. This Leadership is important to watch as an indicator for the potential of others.
The game is simple. We go with what we got, ignoring what “should be” or whatever emotion may strike us for the day.
Any indication of the Bear coming back, we get out. Let the winners run and cut the losers quick. Gain a dollar, lose a quarter.
Low-volume pullback across the indexes don’t have enough thrust to negate our Bullish bias.
We were expecting the price gap on the S&P 500 to get filled, as was the case Tuesday.
In order to remain Bullish we want to see sell volume dry up. It would also help to see a continuation of new highs from top stocks.
Keeping our Buyer’s Caution despite light volume suggesting lack of thrust from the Bull.
Wednesday we had what followers of William O’Neil, of Investors Business Daily, CANSLIM’s method call a Follow Through Day, where institutional grade buying might suggest the Bull has legs.
With a number of top-earning stocks being well bid for we’d want to see it last a little longer for being convinced it’s not another suckers rally.
Beginnings of the month often see these names bought as fund managers want to add them to their holdings.
But overall light volume might suggest the trend isn’t all that strong.