Tuesday, July 29, 2014

Two Major Reasons Market Can Rally Further

The market has tried, today, yesterday, the day before, the day before that, and for the last three weeks, to fall into and follow through on a correction. But no matter how much or how bad the news that has been thrown at it, or how ugly the price volume action (stalling and distribution) has been, the market has been able to hold in a fairly tight range. There has been an elevated expectation of the FED tightening their end of QE and raising interest rate time tables. The worry is probably premature and the FED will stay with its current time tables, potentially sparking another short relief rally.

High quality leading growth stocks, Facebook (FB), Baidu (BIDU), Under Armour (UA), Chipotle Mexican Grill (CMG), and Biogen Idec (BIIB), gapped out of bases in strong, well above average volume, and are holding tight, or, in CMG and BIIB's case, following through, despite the pullback in the market the past three days. New breakouts have been joining the leadership, and more are in the wings ready to breakout. Fleetcor Technologies (FLT) broke out of a flat base on top of a cup and handle base today, in well above average volume, and Chinese stock 58.com (WUBA) and Medivation (MDVN), featured yesterday in, Biotech Company Ready To Explode on Earnings, are on the verge of breaking out of cup and handle bases too. Review the (98) Leading Growth Stocks Analysis for more trading ideas and appreciation potential.

Just keep in mind, all the red flags discussed recently, Frustration Not The Only Reason To Hate The Market and Bearish Price Volume Action Dominates Stock Market, are still in place and cannot be ignored, but the fact that the market hasn't sold off despite having a lot of reasons to do so and leading growth stocks are setting up, breaking out, and holding, warrants taking positions on the long side and potentially using intra-day pullbacks as an opportunity to add more. But, leading growth stocks should keep following through, or aggressively tighten stops to protect profits and cut losses short. This will most likely continue to be another, in a series of short, but profitable rally's, since the beginning of the year.
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