Sunday, January 25, 2009

Whither goest thou, Bear Market Rally ?




Well, What we DONT have here is a failure to communicate, ala "Cool Hand Luke".

After spending some time running a series of technical scans, I came up with 11

stocks [ I thought it was 20 but some Old Favorites showed up], that showed a few

characteristics that I thought you'd be interested in observing.

The first characteristic is a breakout,

The second is staying in breakout mode,

The third is being close to support,

The fourth is having upside room to run,

and the Fifth, is developing the momentum to make that run.

We will cover the old favorites seperately.

VAALCO ENERGY > EGY has options

TALISMAN ENERGY > TLM has options

KINROSS GOLD CORP > KGC has options & wts.

GERDAU AMERISTEEL > GNA has options

NORTH AMER. GALVANIZING > NGA

MINEFINDERS > MFN has options

OVERHILL FARMS > OFI

BLOUNT INC > BLT has options

HEWLETT-PACKARD-COMPAQ > HPQ has options

NAT'L SEMICONDUCTOR > NSM has options

ADAMS-MIDLAND-ARCHER > ADM has options


So this group includes ENERGY, GOLD, STEEL & METALS, CONSUMER, TECH & AG.

I did NOT analyze them by sectors, but if you go here http://stockcharts.com/
and put up the GALLERY CHART, scroll to the second chart from the bottom :
which appears at the TOP of this page. Please note the BOTTOM panel in this chart, which matches the stock in question against the S&P 500, which roughly speaking, plots the RELATIVE STRENGTH of the stock in question. Dont hesitate to plug in all or any of the symbols that interest you in the GALLERY chart [ or any other for that matter, that suits you ], and make your observations, thats part of your DYODD & DYOHW.
OUR accounts seldom buy market orders except under two conditions : The stock is a hard one to buy, and we see some price weakness > BINGO, we enter a market order.
The second is where we have a tailing stop in place that is HIT on the Brokers in-house computer, and sent to the trading floor as a MARKET SELL. Other than that,
we attempt to define the support levels, by observing the charts, and enter a LIMIT BUY ORDER at such and such a price OR LESS.
Part of your HOMEWORK is to attempt to define SUPPORT LEVELS and then find a likely level of the stock, somewhere around support WHERE YOU CAN ACQUIRE SOME if you think it prudent to do so.

Please think this thru carefully, do not act in haste, but once in motion, act decisively as IMO, this will be a Bear Market Rally, no matter how long or short.
Should I be wrong, you at least will be on the correct side of the action.

There, enjoy. The next post will cover some old favorites we have been buying and selling since the Oct/Nov Bottom for our INVESTMENT EDUCATION SIMULATION PORTFOLIO.

DG

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