Jan 17 2014, 4:33pm CST | by Forbes
What a week this has been. It started with a broad sell-off, but on Tuesday the indexes recouped all that was lost on Monday and traded the rest of the week up to either lateral or trend channel resistance.
With respect to the indexes, the trend of buying stocks at support in tandem with the indexes at support remains in tact. At some point this trend will change, but for now that remains the trend to trade off of.
The action in the indexes was nothing compared to the Mr. Toad’s wild ride in leading stocks. On the plus side, Priceline.com (PCLN) and Apple (AAPL) bounced nicely from support areas.
On the downside it was a rough week for many of last year’s big winners:
So what does this tell us?
With regard to leading stocks, there’s two ways to look at it. The first is it’s always a stock picking market and from time to time leadership rotates from past leaders into new leaders — solar could be a new leadership area as those stocks had a big week. Leading stocks often rally BEFORE the market does and fall BEFORE the market does.
The sell-offs in many leading stocks combined with the indexes close to short-term resistance can’t be ignored. Any healthy pullback off of resistance to support levels would do a world of good for those of us that like to buy leading stocks at support and not chase stocks.
So we’ll continue to sit back and let stocks come to us and use support levels as our low-risk entry points.
Source: Forbes Business
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