Movers & Shakers

 
This is an excerpt from Cabot Top Ten Trader, which features the best trades to make every week.  Designed for experienced investors who want even more great growth stock ideas, this advisory recommends the best 10 stocks each month for short-term investment by aggressive growth investors.
 

The market has been solid since the intermediate-term trend turned up last week. It’s not 1999, of course, but so far the indexes have done a good job holding their gains (even the declines on Tuesday and Wednesday were very reasonable compared to the prior advance) and the broad market looks much better (fewer than 40 stocks are hitting new lows every day).

Growth stocks don’t look quite as good. Many were resilient through the market correction but haven’t done much since the indexes began to rally; most of the action has been among the beaten-down stocks (commodities, transports, industrials, etc.).

That’s not a bad thing per se, and even now there remain a bunch of growth stocks set up in solid multi-week consolidations, ready to lift off … if the market stays healthy and if earnings reports please investors.  

And that brings us to
The market has been solid since the intermediate-term trend turned up last week. It’s not 1999, of course, but so far the indexes have done a good job holding their gains (even the declines on Tuesday and Wednesday were very reasonable compared to the prior advance) and the broad market looks much better (fewer than 40 stocks are hitting new lows every day).

Growth stocks don’t look quite as good. Many were resilient through the market correction but haven’t done much since the indexes began to rally; most of the action has been among the beaten-down stocks (commodities, transports, industrials, etc.).

That’s not a bad thing per se, and even now there remain a bunch of growth stocks set up in solid multi-week consolidations, ready to lift off … if the market stays healthy and if earnings reports please investors.  

And that brings us to our main thought: Should we see a bunch of these stocks that are set-up in sound bases lift off on earnings, it will be your sign to become more aggressive. If, however, we see continued selling on strength (most stocks approaching their old highs have either stagnated or come under pressure), we’ll stay somewhat neutral and pick our spots.

Obviously, all of that analysis will go out the window if the major indexes crack, but as long as the intermediate-term trend is up, earnings season is what we’ll be watching closest.

Lastly, a word about those beaten-down stocks and sectors. There’s nothing wrong with taking a stab at a couple of stocks (or ETFs, if that’s your thing) in those groups; we had a couple of energy plays in this weeks’ Top Ten, after all. But realize that the longer-term trend for these groups remains down, so the groups are likely to hit some overhead resistance during the next couple of weeks. In other words, keep your expectations in check and don’t be afraid to book partial profits on the way up.
If, however, we see continued selling on strength (most stocks approaching their old highs have either stagnated or come under pressure), we’ll stay somewhat neutral and pick our spots.

Obviously, all of that analysis will go out the window if the major indexes crack, but as long as the intermediate-term trend is up, earnings season is what we’ll be watching closest.

Lastly, a word about those beaten-down stocks and sectors. There’s nothing wrong with taking a stab at a couple of stocks (or ETFs, if that’s your thing) in those groups; we had a couple of energy plays in this weeks’ Top Ten, after all. But realize that the longer-term trend for these groups remains down, so the groups are likely to hit some overhead resistance during the next couple of weeks. In other words, keep your expectations in check and don’t be afraid to book partial profits on the way up.

Michael Cintolo can be found on Google Plus.

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