I expected the market market internals to look worse than they were after the losses in the indices, but they are weak nevertheless. The screened stock ratio continued the down trend it has been in since January 4th, at +1.22 favoring buying, the estimate of market risk remains moderate, but is rapidly approaching the negative. At this point most of the stocks we watch are compressed into the bottom of their support, this makes, (at a time when getting into the market is at a peak in fear), the safest entrance since the loss is smallest, (distance from the buy to the stop), and the reward is highest, (distance from the buy to the resistance target). So either the stocks get a bounce in the next couple days, or the market risk for long positions will be too high.
Most of the strong groups are getting profit taking, which until the screened stock goes negative I still consider this a buying opportunity, just pick your target out of a strong stock in a strong group. The strong groups over a 3 month period include; computer services, computer peripherals, computer memory devices, Internet ISP's, gaming, homebuilders, software, restaurants and select retail.
Stocks to buy on support: APOL, BBBY, KBH, KLAC and MNTG.
Good Trading!!
Sam
savvy-trader.com |
