That said, the broad market remains extremely split and volatile. Even during the rally this week, there have been dozens of stocks hitting new lows on the NYSE every day. Plus, leadership ranks remain thin, and even among stocks that are acting well, many are running into selling pressure as soon as they punch out to new highs.
This so-so action among individual stocks keeps us relatively neutral. We’re all for holding your top performers (though booking some partial profits on the way up is prudent) and looking to buy the best stocks at attractive entry points, focusing on the best stories and set-ups—but it’s also smart to hold some cash.
The good news is that the action of the past two weeks may have put the finishing touches on some basing patterns among potential leaders. If we see some of these stocks emerge to new highs (or off support), it would give the market more leadership and provide us with more stocks to really sink our teeth into. That’s what we’ll be watching for during the next week or two.
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.
Michael Cintolo is Cabot's Vice President of Investments and Chief Analyst of Cabot Growth Investor and Cabot Top Ten Trader. To read customer reviews of Cabot Top Ten Trader, click here. To read reviews of Cabot Growth Investor, click here.