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One of the more rigorous aspects about trading full-time is putting in your nightly homework not so that you automatically make money each and every single time the next day, but so that you can best get a feel for the nature of the current market. Over the past two days, the major averages have consolidated the steep move higher we experienced since the middle of March. Many levered, high beta areas of the market have sold off violently, and sentiment has largely turned more cautious.
While scanning through charts this evening, the drug stores popped up as one of the best set up areas of the market. While the knee-jerk reaction may be to think, “These charts are set up, so I will simply buy them first thing tomorrow morning and dominate this market,” the better strategy in this current situation is to use them as gauges for how well “breakout plays” are working. Obviously, those types of plays have not worked in the past couple of trading sessions. What we are looking to see is whether that condition persists. If it does, then it is all the more reason to respect the nature of a market in consolidation. Moreover, it is also a reason to consider focusing more on potential support buys in lieu of breakout plays. Hence, focusing how how you use the charts that I present is usually far more instructive than simply looking at them and deciding whether to take the trade or not.
If you are, in fact, looking to be a drugstore cowboy ahead of WAG‘s April sales release tomorrow and CVS‘s earnings on Thursday, then the following charts look ripe. See my analysis and price triggers below.
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William S. Burroughs ftw. Thanks for helping me with my homework C&W!
RAD made me think of RDNT, another cheap stock trying to break out of a long base.
agree–good look
very cheap,RAD
yep
RAD is up and coiling on the daily. Don’t know what RDNT is doing trying to b/o early…earnings on 5/10.
Nice