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Keeping your head on a day like today is important. We abruptly sold off after the Bernanke statement earlier this hour, and the market is now awash in fear. You will want to obey your stop losses, but apart from that, suddenly panicking out of positions is not a good idea. We were not overbought before the selloff, and The PPT suggests that we still have higher to go.
I would be surprised if we did not have a mild recovery from the swoon by day’s end.
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Inside The PPT, the Ragin’ Cajun designed a screen that automatically detects stocks showing unusual strength that are near their 52 week highs. The list tonight offers several attractive setups. One aspect of tonight’s reading that sticks out to me is that the triumvirate of cell phone towers are on the list: $SBAC, $CCI and $AMT.
Note that the cell phone tower space is an area that hedge funds have recently become infatuated with. If they decide to get back into the market in an overweight equities position, then I would expect these three names to move, and move fast.
Like many other stocks, their daily charts have been sideways-to-down over the course of the past few months. All three experienced huge spikes higher today on very strong volume. For the purposes of getting a bigger picture perspective, I am going to show you their weekly charts, which should illustrate that they have been in bullish consolidation phases over the past few months.
I currently have no positions in any of them, but will be stalking.
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I sold my remaining 1/2 position in $THOR for a small loss. The stock is not participating in today’s rally, and the daily chart has not progressed in a bullish manner. The chart is not exactly broken, but I would rather use that cash for better performing names.
All trades are timestamped inside The PPT.
UPDATE: I bought a full long position in $ARUN.
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TOTAL PORTFOLIO:
EQUITIES: 36%
CASH: 64%
Comments »Let’s do some analysis on $GS, as they reported earnings this morning. On April 16th of this year, the stock spiked down hard on heavy volume when the SEC announced their fraud charges. That high volume news driven selloff more or less began the broad market correction as well.
Ever since that huge spike down, however, the stock has pulled back in an orderly way, with tight price candles and on benign volume. In essence, it was a slow drip down over the past few months. As the updated daily chart illustrates below, the falling wedge started to base out, and the 20 day moving average followed suit as it flattened out as well.
After the stock had a nice run higher on news of the settlement with the SEC last week, it has pulled back in a gentlemanly manner. In my view, the 50 day moving average is crucial here. You would like to see a benign retest of that reference point, and then see both price and the 50 day turn back up as well.
$GS may, indeed, have bottomed here. I do not think that you should go buy this in size right here, right now. However, I believe you should keep this near the top of your watch list. I currently have no position in the name.
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Keep an eye on this 1072-1073 level on the S&P 500 going into the bell today. On a short term time frame, this is tough resistance. Should we break above it, we could easily sprint to 1080 in a flash. Above 1080, we could quickly fill the gap from Friday’s swoon up to 1098. Without recapturing 1072-1073 first, however, all of those gap fills are a moot point.
Otherwise, we will continue to chop around below 1072, and likely breakdown to 1050 or lower.
Check out the 15 minute chart of the S&P, seen below.
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I sold out of my final 1/2 position of $LULU. The first 1/2 I sold a while back was for a nice profit, whereas this 1/2 is for literally break even. The daily chart of the stock, seen below, is a pretty good reason why I sold. Notice how the stock has been wedging up on light volume, only to breakdown again. Even if the stock doesn’t continue to breakdown, I want to avoid turning a winner into a loser.
All trades are timestamped inside The PPT.
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TOTAL PORTFOLIO:
EQUITIES: 32%
CASH: 68%
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