August 15th, 2008

New High List:: EL, DMND, GENZ

Our number one priority should always be taking the market’s temperature because, as you’ve read here before, ““50% of a stock’s price movement can be attributed to the overall movement in the market, 30% to the movement in its sector and only 20% on its own.” It’ll be horizontal markets like these that test your mettle as a trader or investor. The market was at today’s close on June 26, March 17, January 22, August 23, 2006 and, yes, even February 27, 2006! So if you feel like you’ve been running a treadmill and getting nowhere then you’re lucky because at least you’re still in the game.

But that’s not to say that traders can’t dream and hope. So I still look at my various scans (New Highs, Momentum, RSI, Price Gaps) to see if there might not be a stock or two with an interesting chart to take a flier on. And today following appeared close to the top of the list:

  • EL (Estee Lauder): I’ve been in and out of this stock several times over the past 18 months looking for the big break out that would clear prior resistance levels (see previous comment on May 13). Yesterday, it jumped. Rather than the previous close-up view, here’s a longer term chart that shows a compelling story:

  • DMND (Diamond Foods): The stock offers two momentum stock characteristics. Not only does it fall in the category of a relatively “new IPO” having first started trading in August, 2005 but it also is now charting virgin, all-time new high territory. Everyone who’s ever owned the stock has a profit.

  • GENZ (Genzyme): The stock is riding the wave carrying many biotech stocks into a new high territory. If you don’t want to play individual stocks, the biotech etf’s, BBH and IBB also look like they’re going to enter into virgin, all-time new high territory.

Remember, the light is still flashing red. Any of these can’t be considered long-term positions until the market flashes a green-light, bullish signal. And when might that be? Not until the S&P 500 Index clears 1360 with conviction, or another 5,2% to go on significantly improved volume.

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