Wednesday, May 26, 2010

Market Action Very Similar To 8-16-2007 - Bullish - Updated - NFLX, APKT, SNDK

Below is a snapshot comparing the 8-2007 NASDAQ to the current NASDAQ (green arrows represent the the two positive reversal days). As you can see the market managed to rally quite significantly off that turn around to new highs. That was the most profitable part of the rally for swing traders.

Do not look for new leadsership to emerge, even though some are bound to show up. Look for stocks that are already proven winners, have exhibited high relative strength during the correction, and are must owns for institutions that must be 100% invested (click on charts below).

Don't allow your mind to convince you that we've entered a new buy and hold period. At best, if this rally attempt holds and we follow through, we're looking at a 1 to 3 month rally. It'll get easier to tighten up that time frame once we really get moving.

Don't panic and buy blindly.  If August of 2007 is any precendent, we should get more setups over the next few days and weeks.  Definately dip your toes in and add as new opportunities present themselves on pullbacks or base completion.

Headline risk out of Europe and Asia will keep the volatility high, so be vigilant with your stops.  You're going to have to endure it to some degree if you're going to maximize your returns. 

Ultimately we're still waiting for a follow through day to confirm this rally.  So any buys before that are high risk, but also carry a high reward.

Good Luck

I alerted readers of this blog early yesterday to the possible turn around.  If you want real time alerts and updates, sign up at Twitter and follow Gennady17.  Sign up for the FREE newsletter at Capitalist Bull for a daily digest of the blog's activites (don't forget to look for a confirmation email).

FD - Long APKT and NFLX
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