Wednesday, April 02, 2014

Market and Leading Growth Stocks Digest Two Day Surge in Lower Volume Further Upside Remains

After a two day, higher volume surge, the market opened flat and traded flat, with a slight downward bias, closing modestly higher after a late day rally materialized. Volume came in lower and below average, exactly the type of action traders are looking for to confirm the rally attempt remains healthy. The market still needs to pass the test and continue rallying strongly over the next day or two.



Leading growth stocks continued to follow through on recent breakouts, but many spent the day lagging the general market, digesting recent gains in lower volume. Setups continue to develop and are ready to breakout and follow through. There has been little to no negative action since the market bottomed, March 27th. GasLog (GLOG), Silica Holdings (SLCA), and Concho Resources (CXO) continued to follow through on recent gains, and Lithia Motors (LAD) broke out of a double bottom with a handle base, volume was lower then expected for a strong breakout.


Today's action further confirmed the rally's health. After surging for two days, the market and leading growth stock paused in lower volume and setup the next round of potential breakouts. Another quick shakeout can be expected before the Monthly Job's Report on Friday, but traders should be accumulating long positions, and ready to initiate new positions, on short shallow pullbacks on any given day.


TRADING IDEAS


Tesla Motors (TSLA) broke out of third stage, cup shaped base in heavy volume and advanced over forty percent in under a month. The stock has since been pulling back to the fifty day moving average in lower volume, setting up a potential final climax run. A breakout above the recent down trend line should launch the stock higher.





Air Lease (AL), discussed several times in past blogs, continues to setup a flat base pullback to the twenty day moving average. A breakout above thirty eight dollars, should advance the stock another ten to twenty percent.




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