Thursday, February 27, 2014

Warning Sign Adding Up Thursday Leading Growth Stocks Remain Strong

The market opened up, shook around for about thirty minutes, and rallied strongly into the close. Weak, below average volume cast doubt on the strength. After four recent distribution days, it would have been nice to see the market rise on higher volume. The recent pattern of buying on lower volume followed by heavier volume selling or stalling continues is becoming worrisome.

Leading growth stocks in general are acting perfectly. We've had few breakdowns or major stalling action, and breakouts are on strong volume with meaningful follow through. But, several of the early movers are in potential climax runs, new long setups fail to follow through and shakeout traders, and intra-day movement is becoming more volatile.

Taser International (TASR) followed on gains to its recent breakout, a day after shaking out investors on a strong earning's report. NQ Mobile (NQ) is adding to gain out of a quirky cup and handle, Hovnanian (HOV) is moving up the right side of its cup base, and Chipotle Mexican Grille (CMG) readying to break out of its four week tight range.

On the downside, Questcor Pharmeceuticals (QCOR) sold off another 9% a day after a somewhat disappointing earning's report and falling below its double bottom pivot point, Valeant Pharmaceuticals (VRX) gave up all its gains after a strong earning's report, and Continental Resources (CLR) is threatening to fail from its cup breakout after a weak earning's report.

A top is a slow process regardless of rally strength. The market sends just short of enough clues when it is topping, but it is only clear after it starts to collapse and traders become deer in headlights. The clues are meant to reduce market exposure, tighten stops and protect profits on over extended climactic stocks and control losses on new positions, while remaining patient with strong positions until a major sell signal appears. The clues tend to be early at times, that is why staying patient with a handful of positions that are acting exactly as they should, maintains market exposure while reducing overall exposure just in case.


DF has lagged the market since August of 2013. The stock fails to rally with the market and sells off fast and hard when the market pulls back. A break off the 20 day moving average on heavy volume could carry the stock below $13.

Wednesday, February 26, 2014

Indices Stall Wednesday Suffer Fourth Distribution Day

What was shaping up to be just another ordinary rally day, turned ugly around two o'clock when a major sell program hit the market giving up all the day's gains. By the close, the market mustered a small gain on higher above average volume. Registering another distribution day. Marking the 4th such day in the last seven trading days.


Leading growth stocks have suffered little damage over the last few days. But, many of the rally's biggest winners are potentially in the midst of climax runs, shorter term setups have had a hard time making progress, and leading growth stocks have become more volatile intra-day.

The number of warning signs is slowly adding up despite little damage in leading growth stocks. Considering how far along the bull market is, the numerous amount of potential climax runs and lack of new breakouts should put traders on defense. Traders should take profits in over extended positions and tighten stops on new positions failing to follow through or stalling.


Over the last few days, the short ideas list which has been dormant since the market bottomed on February 5th, has started showing sign of life. Several stocks have started to tighten up into potential short setups. Traders should review the list closely in case all the recent warning signs add up to a market top in the next few days or weeks.

Lions Gate Entertainment (LGF) has been lagging the market since September after running up around 400% in the previous two years. The stock is in the midst of forming a head and shoulder pattern. Look for a breakdown below the recent consolidation to confirm further downside under $25.

Tuesday, February 25, 2014

Calm Tuesday Trading Firms Case for More Upside

The indices closed slightly down on quiet volume. Digesting yesterday's strong gains and giving bears little ammunition to work with, and bulls nothing to complain about. The market mimicked last Wednesday's action, selling off early, trying to rally into the close, as has been the case every other day since the rally bottom on February 5th, but a mid day wave of selling carried the market lower.

Leading growth stocks did not suffer any damage, consolidating on quieter volume. A few stocks did manage to break out to new highs and add to already big gains on above average volume. Giving traders little reason to sell them.

YY (YY) broke out of a flat base pullback to the fifty day moving average, Solarcity (SCTY) broke out of a flat base pullback to the twenty day moving average, and Carrizo Oil and Gas (CRZO) broke out of a cup and handle.

Tesla Motors (TSLA), (PCLN), Jazz Pharmaceuticals (JAZZ), Netflix (NFLX), and Springleaf Holdings (LEAF) added to recent gains.

With few worrisome signs, traders have to use pullbacks to add to or initiate new trading positions. Each shakeout/pullback may trigger tighter stop losses on extended and new trading positions, reducing some exposure just in case. Otherwise, stay patient with existing positions.


NVR (NVR) is currently the leading stock in the strong home building group. The stock broke out of a cup and handle base in January, on volume 135% greater then the fifty day moving average, advancing as much as 15% in under two weeks. It is currently pulling back to the twenty day moving average in a three weeks tight pattern on quieter volume. A breakout above the $1,200 range could carry the stock higher by another 10 - 20% over the near term.

Fellow home builder Hovnanian (HOV) has been trying to consolidate at the bottom of a potential cup shaped base since the beginning of January 2014. This recent consolidation can also be viewed as the handle of a year long cup and handle base forming since January 2013. A breakout above the recent range around $6.00, could trigger a breakout move above the handle high of $6.60.

Monday, February 24, 2014

Indexes Set New Highs Monday Leading Growth Stocks Strong

After consolidating most of last week, working off its over extended condition and digesting recent gains, the market resumed its rally. The S&P  500 and NASDAQ broke out and closed up at all time and fifty two week highs, respectively. Volume was mixed, but above average, confirming the strong move.

Leading growth stocks have not revealed any major cracks and continue breaking out and rising on  above average volume. The Blackstone Group (BX) broke out from a flat base pullback to the fifty day moving average, YELP (YELP) and Netflix (NFLX) broke out from pullbacks to the ten day moving averages, and Springleaf Holdings (LEAF) and Matador Resources (MTDR) broke out of cup shaped bases.

The few cracks in leading growth stocks have been in Chinese internet stock, E-House Holdngs (EJ), YY Inc (YY), Youku Tudou (YOKU) and SouFun (SFUN), which have lagged and acted poorly since the market bottomed on February 5th, and leading growth stocks breaking out of late stage consolidations on potential climax runs, Lannett (LCI) and Under Armor (UA). Any other weakness in leading growth has been quickly overcome.

There is a high probability the rally will last until, at least, the DOW Jones Industrial Average ($INDU) reaches into fifty two week highs, but with some warning signs creeping in; two to three days of distribution over the last week, leading growth stocks potentially climaxing, new breakouts coming out of shorter, more failure prone consolidations, traders must be selective and tighter on new positions, but more patient with existing positions except for those out of late stage consolidations. The trend is still our friend, but prepare for the shakeouts.

Canadian Solar (CSIQ) is part of the hot solar stocks group and has risen over 600% in the last year. The stock is forming a pullback to the fifty day moving average flat base. A breakout above the recent consolidation and down trend line could see another 10 - 20% appreciation. The stocks is in a late stage consolidation and prone to quick failure. So keep the stop loss tight and take profits quickly over next week or two.

Thursday, February 20, 2014

Indexes Sell Off Early Close Strong


Today was no different then most other days since the market bottomed on February 5th. An early sell off is quickly supported and the market rally's strongly for the rest of the day to close up on higher volume after weak economic data...Philly Fed came in well below expectations at 10 am. Rumors pre-market that Moody's would upgrade Italy were also met with aggressive buying. Good news is good news, bad news is good news continues.

Traders need to be patient with existing positions, except for those that are trading significantly higher from their breakouts out of late stage consolidations. Protect those profits, many of these moves could be final climax runs and will last, on average, only two to four weeks. Be selective about adding to or initiating new positions. Most of the strong stocks have already broken out. Few will offer an additional entry point before the next major pullback. No need to risk already hard earned profits to over trading.


Leading growth stocks continued to power ahead but most recent short term setups have either failed to breakout or are volatile and shakeout traders. The strong action is in stocks already extended from breakouts or reporting earnings. Horizon Pharma (HZNP), Questcor Pharmaceuticals (QCOR), Valeant Pharmaceuticals (VRX), Qihoo 360 Technology (QIHU), and Diamondback Energy (FANG) added to recent gains and Portfolio Recovery Associates (PRAA), Tesla Motors (TSLA), Actavis (ACT), and ARRIS Group (ARRS) gapped up on strong earning's reports and added to recent gains.


Keep an eye on recently discussed setups in Chipotle Mexican Grill (CMG), Under Armour (UA), NQ Mobile (NQ), Hovnanian (HOV) and Blackstone Group (BX). Few other setups have managed to stay tight and worth the risk.

Wednesday, February 19, 2014

Indexes Sell Off No Major Damage Suffered


By mid day it seemed the headline for the day would once again be, stocks sell off at the open only to rally into the close. But just before noon, comments from Atlanta Fed President Lockhart that the Fed's asset protection program will be wound down completely by the fourth quarter were met with heavy selling in the indexes. Fed minutes, released at two o'clock, confirmed this sentiment, but left the door open for a slow down in tapering if conditions worsen, but did not indicate what the threshold would be. By the close, all indexes suffered their second distribution day (higher volume selling), but below average volume tapered the sting.

The pullback was not unexpected. The market had been over extended for four days and setups were thinning. Traders were looking for any excuse to take profits and today they got plenty of them. The only positions that should have been stopped out were new positions initiated the last few days, to protect from losses, and over extended breakouts from later stage consolidations, to protect profits. The pullback is welcome and should be used to add to or initiate new positions.


Leading growth stocks consolidated in normal action on lower volume. None suffered any major damage that would be worrisome. The downside was led by energy and internet related stocks, SolarCity (SCTY), Gastar Exploration (GST), Kodiak Oil and Gas (KOG), YY (YY), Vipshop Holdings (VIPS), and Pandora (P).

Even with all the negative action, Taser International (TASR), Spirit Airlines (SAVE), (WBAI), and Northstar Realty Finance (NRF) broke out on stronger volume. After hours, Tesla Motors (TSLA) and Portfolio Recovery Associates (PRAA) gapped up over 8% on strong earning's reports.


Blackstone Group (BX) has doubled in price over the last year and has formed a later stage flat base pullback to the fifty day moving average. A breakout above $32 or 33.50 could produce a nice short term trade.

Tuesday, February 18, 2014

Leading Growth Stocks Choking Bears But S&P 500 Stalls


The market continued its recent pattern of selling off first thing in the morning on weak economic data, only to regain its footing quickly and rally for the remainder of the day. All three economic report's, Empire Manufacturing, Net Long-Long Term Tic Flows, and NAHB Housing Market Index disappointed.

The NASDAQ rose into new fifty week high territory on  barely higher, but below average volume, while the S&P 500 Index made little progress on higher volume producing a stalling day. Each index now has one stall day in the last two weeks which is nothing to worry about just yet.

With the market now over extended for the fourth straight day and few setups remaining in leading growth stocks, traders should tighten parameters and keep stops tight on new positions until the next shakeout/pullback. Traders should also consider taking profits on existing positions that have made strong moves in the last two weeks out of late stage consolidations to reduce risk and prepare for a potential shakeout/pullback.


Leading growth stocks have barely blinked in the last two weeks powering higher on heavy volume. Medical stocks, Jazz Pharmaceuticals (JAZZ), Questcor Pharmaceuticals (QCOR), INSYS Pharmaceuticals (INSY), Horizon Pharma (HZNP), and Valeant Pharmaceuticals International (VRX) led the way after Actavis (ACT) agreed to buy out Forest Laboratories (FRX) for twenty five billion dollars.

Taser International (TASR) and (WUBA) bounced off their fifty day moving averages, while SolarCity (SCTY) and Qihoo 360 Technology (QIHU) broke out to new fifty two week highs after bouncing off their twenty day moving averages.


Chipotle Mexican Grill (CMG) has formed a three weeks tight pattern, tightening into the ten day moving average after gapping out of a double bottom base on a strong earning's report. The current tightness can be considered a high handle to the double bottom base. Look for a breakout above the trend lines at around $562 or 569 for a further rise in the stock price.

Under Armour (UA), discussed last week, continues to tighten around its ten day moving average despite the shakeout on news out of the Sochi Olympics that its speed skating suits contributed to slower race times for the US Olympic team. A breakout above $110 could produce a quick trade into the $120 - 130 range.

Friday, February 14, 2014

Bulls Keep Bears Hibernating


Market started down, but as has been the case since the market bottom, ended the day higher, closing at weekly highs. The NASDAQ, clearly the leading index, closed at new fifty two week high but lagged on the day. Volume was lower and below average, but expected ahead of the long weekend and the East Coast snow storm probably kept many traders home, shoveling and sledding with their kids. The market is over extended and could use some consolidation to keep itself healthy. It would have been preferable to see a lower volume pullback after being up for almost six straight days, now seven.

The NYSE advance/decline line has led the way into new high territory. A very bullish sign.

Next week is option's expiration which generally leads to at least one violent shakeout against the trend during the week. Overall, long traders could not have asked for better market action over the last two weeks after the heavy distribution over the previous three weeks, and in the face of week economic data.


Leading growth stocks, on average, under performed the market today, marking the first such occurrence since before the market bottomed on February 5th. None of the action was worrisome, just normal consolidation after big moves over the last two weeks. Overall, leading growth stocks have significantly out performed the market since the February 5th bottom and remain intact to rise further.

Expect and prepare for violent one day shakeouts to add to or initiate new positions in leading growth stocks. Take a day off to clear the mind, but don't forget to review the leading stocks analysis section for new or additional entry points.

Thursday, February 13, 2014

Bears Run For Cover Bulls In Full Control


Asian markets sold off over one percent, Europe was trading down, the US markets were indicated significantly lower and opened down. But as quickly as the market opened down, within fifteen minutes, the market turned and headed higher, barely pausing for the remainder of the day and closing at the highs, adding a third strong accumulation day in the last week. The NASDAQ is now within .15% of a fifty two week high.

The market is in a good news is good news and bad new is good news mood. Retail sales and weekly jobless claims disappointed with an initial negative reaction, but that was recovered quickly. It seems the market could be baking in a pause in the taper and increase in the bond buying as a best case scenario because recent economic indicators have been pointing to a slow down in the economy. While this is wishful thinking, it is enough to fuel the rally until Fed governors indicate otherwise between the next meeting or taper again at the next meeting in March.

Traders should be long at least a few positions and looking to add or initiate new positions on weak openings or pullbacks. If last year's pattern holds, weak openings may be the only additional opportunities to get in on low risk entries. But, the further we rally, the risk of new setups failing begins to increase exponentially as they would be viewed as laggards and first to be sold by traders.


Leading growth stocks were barely phased by the weak opening. Many opened lower along with the market, but most found their footing immediately and continued to break out and follow through on recent breakouts, further confirming the bullish overall action since the market bottomed February 5th.

Chipotle Mexican Grill (CMG) broke out of a double bottom with high handle base, Questcor (QCOR) cleared the mid point of a double bottom base, Vipshop Holdings (VIPS), ARRIS Group (ARRS), Synaptics (SYNA), and Northstar Realty Finance (NRF) broke out from pullbacks to the twenty day moving average. Tesla Motors (TSLA), Facebook (FB), Netflix (NFLX), Michael Kors (KORS), and Ligand Pharmaceuticals (LGND) continued to follow through on recent strong action after breaking out over the last few weeks. All on above average trade.


Under Armor (UA) has been one of the bull market's biggest winners, rising over 1,000%. The stock could be in the final stages of its run and in the midst of a climax run. A break above $110 could carry the stock another 10 - 20% as it completes the climax top.

Canadian Solar (CSIQ) is part of the hot solar group. The stock has run up over 1,000% in the past year and is in the midst of setting up a late stage, flat base pullback to the fifty day moving average. The stock sports the best fundamentals among its peers. A break above the downtrend line around $40 could spark another 20 - 30% rise in the stock price.

Wednesday, February 12, 2014

Quiet Pause Healthy For Rally


After almost five straight up days, the market finally took a well needed breather on mixed volume. With no real market moving news today, a quiet pause is healthy bull market behavior after a strong bounce off the two hundred day moving average and two accumulation days in a week.

Ideally the market stays quiet over the next few days to allow leading growth stocks time to digest recent gains and tighten up new setups. The major snow storm headed for New York City tonight might just lend a helping hand.


Leading growth continued their recent bullish action. Sanchez Energy (SN) broke out of a cup shaped base, NPS Pharmaceutical (NPSP) broke out of a cup with high handle base, (PCLN) broke out of a flat base pullback to the fifty day moving average, Amira Nature Foods (ANFI) and Jazz Pharmaceuticals (JAZZ) broke out from pullbacks to their twenty day moving averages, while recent breakout's Lannett Co. (LCI) and Questcor Pharmaceuticals (QCOR) added on to recent breakouts, all on heavy above average volume.


Taser International (TASR) has regained its lost luster with a new body camera for police forces. The device promises to cut down police brutality accusations by filming everything the officer does and see. After more then doubling from its August 2013 cup and handle breakout, the stock has formed a flat base next to flat base. A breakout above the downtrend line around $17 sets the stock up for a breakout above the base peak at $18.88. Earning are expected February 26th.

NQ Mobile (NQ) has formed a quirky cup and handle base after tanking over 60% on October 24th on a bearish report from Muddy Waters. The fundamentals remain impressive as long as the Muddy Water story does not turn out to be true. The technicals have shown strong daily and weekly accumulation ever since that atrocious week. A breakout above the handle high of $18.50 could set the stock up for a run into fifty two week high territory. Earnings are expected around March 6th.

Tuesday, February 11, 2014

Rally Adds Accumulation Day Further Confirming Bullish Behavior

The market opened modestly higher and continued higher as Janet Yellen's first testimony before Congress began. The rally accelerated when Yellen said, "looking at valuations it does not suggest asset prices are in bubble territory". This has to be considered Janet Yellen's bullish version of Alan Greenspan's Irrational Exuberance comment in 1996. Janet Yellen single handedly added fuel to the rally.

The indexes marked their second accumulation day since they bottomed last Wednesday. While volume is lower, but above average than the recent distribution days, it is normal for rally's to start with lower volume and grow as traders gain confidence in the rally attempt.

Leading growth stocks continued their bullish action, breaking out and adding to recent breakouts.

Alexion Pharmaceuticals (ALXN), Facebook (FB), Yelp (YELP), Google (GOOG), Netflix (NFLX), Actavis (ACT), Michael Kors (KORS), Diamondback Energy (FANG), and Ligand Pharmaceuticals (LGND) added to their recent breakouts.

In the last two trading days Lannett Co (LCI) broke out of a rare ascending base, Tesla Motors (TSLA) broke out a cup shaped base, Regeneron Pharm (REGN) broke out of a cup and handle, Questcor Pharmaceuticals (QCOR) broke out of a double bottom with handle, Valeant Pharmaceuticals (VRX) broke out from a pullback to the twenty day moving average, and Kapstone Paper Packaging (KS) broke out of a late stage base flat base, but shook out traders at the open after last nights earning's report, before reversing and closing higher above its pivot point.

Northstar Realty Corp. (NRF) broke out of a cup and handle base in December and has advanced almost fifty percent in the last two and a half months. The stock has pulled back to the twenty day moving average in a very tight and orderly fashion. A breakout above $14.54 could see the stock rise to its upper trend line. Earnings are expected February 27th. The stocks dividend yield of 5.83% is not too shabby either.

Arris Group (ARRS) broke out on earnings in October and has advanced over sixty percent in the last four and a half months. The stock has pulled back to the twenty day moving average and formed a three weeks tight pattern. A breakout above $26.53 could see the stock rise to its upper trend line above $30. Earnings are expected February 19th.

The market is a bit extended and in need of a short pullback, but that has not stopped the market in the last year. Weak openings should be used to add or initiate new positions as they breakout. One day shakeouts have been enough to resume rally's in the last year.

Sunday, February 09, 2014

Weekly Review: Bulls Chase Bears Back Into Hibernation Scare Punxsutawney Phil

After Monday's heavy sell off on huge volume, the market felt like it was on the verge of a much deeper correction. But, by the end of the week, market conditions improved dramatically. The indexes recovered all of the early week's losses to close virtually unchanged for the third straight week. The indexes bounced from over sold conditions, the NASDAQ bounced off a lower supporting trend line stretching back to July 2013, and its 1.69% gain on higher, above average volume, would've been considered a follow through day had it had occurred one day later.

The DOW bounced off its two hundred day moving average. In October, the DOW with the longest and deepest pullback at that time, similar to now, bounced off the two hundred day moving average and continued to rally for the next 3 months. Producing big gains in leading growth stocks.

While the bounce was expected and could be nothing more then a dead cat bounce from an over sold condition, leading growth stocks continued consolidating and breaking out to new highs on higher, above average volume. Very bullish behavior.

Facebook (FB), Netflix (NFLX), Michael Kors Holdings (KORS), YELP (YELP), NVR (NVR), Under Armor (UA), Chipotle Mexican Grill (CMG), Diamondback Energy (FANG), Alexion Pharmaceuticals (ALXN), Horizon Pharma (HZNP), and Qihoo 360 Technology (QIHU) added to or held onto gains from recent, above average, high volume breakouts.

A new group of leading growth stocks are setting up quite nicely. Home builder Hovnanian (HOV) has been forming a year long cup and handle. The handle is a quiet pullback to the fifty day moving average on lower volume. A strong high volume breakout above both trend lines, at $6.00 and/or $6.80, would mark the beginning of a new multi-month rise in the stock price. The stock had already more then doubled from its cup and handle breakout in 2012 before forming the current consolidation. Fundamentals and expectations are excellent for the stock and its entire group. The group has moved from one of the worst, to one of the best within the last three months. The relative strength line is a potential negative. It only recently started to trend higher but has held flat during the recent selling, a positive sign. Earnings are expected March 5th.

Questcor Pharmaceuticals (QCOR) has more then tripled since falling off a cliff, dropping over sixty five percent in September 2012, after a Citron Research report and an Aetna payment denial report. The stock has made a strong, above average, high volume move over the last five weeks, digesting those gains on lower volume last week to form a double bottom with a handle. A breakout above the handle high of 67.11 or double bottom mid-point 70.17 would mark the beginning of a new multi-month rise in stock price. The stock is part of the very strong medical sector and has has one of the strongest records of sales and earnings growth. Estimates are expecting strong growth over the next three years. A PE expansion price target on the stock would almost triple the stock price. Earnings are expected February 25th.

The question on everyone's mind, what's next for the market? But that is not the question to worry about. It's more important to know how leading growth stocks should behave regardless of market action. That's the biggest clue to what will happen next.

If the market continues rise, recent breakouts should continue to make progress and new breakouts should occur after every pullback or shakeout. Continuing the markets year long pattern of short pullbacks that turn on a dime and keep rallying.

If the market sells off to new lows or shuffles sideways, recent breakouts should be able to hold gains, and digest them as their ten and twenty day moving averages catch up. Leading growth stocks consolidating should stay within their consolidations and continue to tighten with every attempted rally. There will be ugly down days for even the strongest stocks, but look at them in the context of their previous movement, not that days sharp selling.

At this point of the bull market, the market has revealed ninety nine percent of the stocks that have the fundamentals and technicals to lead the market. There is no need to go on the hunt for the needle in the haystack stock, there are plenty of well know leading growth stocksthat is a more of an exercise after a bear market. Institutions and the public are now interested in hopping on the momentum wagon, in stocks with proven histories and strong estimates, not dogs with good stories but no follow through up to this point.

Regardless of direction, investors should be on the lookout for entry points. It is rare that a stock will defy direction, especially to the downside, but there are always stocks that do and are the first one's to breakout. Make sure the stock has at least ninety to ninety five percent or more of the fundamental and technical conditions required. Sales and earning's growth history and estimates should be strong and rising, the relative strength line should be trending higher and at or approaching new highs, and has already proven to be a leader during the five year bull market.

Wednesday, February 05, 2014

Market Takes a Breather But Bears Loom in the Shadows

It was an uneventful market day. Indexes closed modestly down on unchanged volume, leading growth stocks under performed on higher volume, and short ideas consolidated recent heavy selling. Expect volatility to pick up again as the Government's Friday Monthly Unemployment Report approaches. The question on everyone's mind, regardless of the number, how does this affect the taper?

Reactions to earning's reports after hours were mixed for growth stocks. Twitter (TWTR) and Pandora (P) gapped down while YELP (YELP) and Green Mountain Coffee Roasters (GMCR) were gapping up. GMCR earning's report wasn't anything to write home about, but a strategic partnership with Coca-Cola (K), to buy a ten percent steak in the company, excited Wall Street. SodaStream International (SODA) shareholders were not as thrilled, as this is seen as a direct future threat to their business. The stock sold off on the new in after hours trading.

Review the short picks from yesterday's blog, Market Higher But Volume Lags Leading Growth Stocks Consolidating, Rackspace (RAX), Newfield Exploration (NFX), Anadarko Petroleum (APC), and Select Comfort (SCSS) which reported a missed earning's report after the close.

Netflix (NFLX) broke out on a heavy volume gap up after reporting surprisingly strong earnings on January 23rd. The stock has since managed to rise further in the face of a weak market. It is now quietly pulling back to the ten day moving average providing a secondary entry. A breakout above the recent high of 412.40 could carry the stock to $500.

Valeant Pharmaceutical (VRX) recently broke out of a flat base on heavy volume and has been digesting those gains into the twenty day moving average on lighter volume. Earnings are expected around February 27th. If the stock can break above 140.36, momentum could carry the stock into the $150 - 160 range.

Perrigo (PRGO) has been forming a flat base on top of a flat base for the last nine weeks after breaking out of a cup and handle base in October. The stock is scheduled to report earnings tomorrow morning before the opening bell. A breakout above 162.35 on heavy volume could send the stock up into the $190 range over the next few weeks.

With rising volatility, large quick moves in either direction could be profitable for shorter tem traders. Continue to exercise caution and patience with new positions. Intra-day volatility turns newly entered positions from profit to loss to profit to loss in minutes. Place stops where the stock should not go to and ignore the bouncing stock. As annoying as it has become, keep long and short lists updated. During volatile times, these lists change much more frequently and require more work to track. .

Tuesday, February 04, 2014

Market Higher But Volume Lags Leading Growth Stocks Consolidating

The market opened higher but quickly turned lower, only to find its footing and rally higher for the rest of the day. Volume lagged again, throwing suspicion to the quality of the attempt. Every recent rally attempt on lagging volume has been followed by high volume selling the following day.

While the market attempted to rally, Short Ideas stocks continued  lower and tightened up for further downside.

Anadarko Petroleum (APC) barely budged after reporting earnings this morning, rallying on lighter volume towards the ten and twenty day moving averages after rolling off the fifty day moving average two weeks ago. A break down below the recent low of 78.15 could send the stock into the low $70's or below.

Rackspace Holdings (RAX) is also consolidating into its fifty day moving average ahead of its earning's report on February 10th. A poor earning's report could send the stock gapping down to the low $30's. The stock has been forming a head and shoulder pattern since 2012.

Newfield Exploration (NFX) has been rolling off its fifty day moving average for the last two weeks and looks ready to test its head and shoulder pattern neckline around $22.50. Short the stock below the recent low of 24.96.

Select Comfort (SCSS) gapped down on earnings January 6th and has slowly digested those losses around the ten day moving average and is slowly rolling over for another big move lower towards the trend line around $14. Look for a break below 16.10.

J.C. Penney (JCP) continued its meltdown to all time lows. The stock gapped up at the open on positive same store sales, but quickly turned significantly lower on heavy volume and closed at the lows of the day and all time lows. Day traders can take advantage of the stocks habit of trending during the day.

Leading Growth Stocks recovered some of the losses from the previous session, but many need more time to finish proper consolidations while others are preparing to breakout or have broken out.

Michael Kors (KORS) broke out of a flat base pullback to the fifty day moving average on heavy volume after reporting a strong earning's report before the open. The stock should be watched for a new entry point over the next few days as the stock drifts down to sideways on lower volume.

Methode Electronics (MEI) has more then tripled since its first breakout, at the beginning of 2013, out of a cup and handle base, is now forming a flat base pullback to the fifty day moving average ahead of its earning's report February 27th. A move above the trend line around $35 could set the stock for a breakout move to $45.

The market continues to indicate more downside. But, as has been the pattern all year, leading growth stocks are starting to setup new consolidations to break out of over the next few weeks. New short trades should not be held for more then a few days, if not shorter. The market is still over extended to the downside and can become even more over extended, setting up a potential snap back rally over the next week or two.

Monday, February 03, 2014

Indexes Suffer Another Day of Heavy Selling Correction Deepens

After opening higher, the market quickly turned lower and sold off after the ISM Index came in significantly below economist's estimates, sparking further fears of an economic slowdown. The Dow and S&P500 are down over seven percent from all time highs, officially in correction territory.

The good news for short term traders, the indexes are getting extended to the downside setting up a potential bounce later this week or next. While many Leading Growth Stocks need more time to complete their consolidations, a few have managed to hold up.

Chipotle Mexican Grill (CMG) broke out of a double bottom base on Friday after posting a stronger then expected earning's report. The stock has pulled back below the 548.24 break out pivot point and setting up a potential secondary entry point.

Taser International (TASR), after doubling from its summer breakout, is now forming a flat base on top of a flat base. Investors and traders should be looking to enter the stock above its fifty two week high of 18.88. The stock is scheduled to report earnings on February 26th.

Kapstone Paper and Packaging (KS) has almost doubled from its summer breakout. The stock has held up well compared to the market correction and is setting up a flat base pullback to the fifty day moving average and poised to breakout above its fifty two week high of 29.16 ahead of its earnings report February 11th.

Traders and investors have to remain cautious. Short setups are now too extended to be considered until the market attempts to rally again for more then just a day, and diligent enough to be on the look out for strong stocks holding up and setup to run with any short term bounce in the market.