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Saturday, December 20, 2008

IBD 100

IBD this morning mentions the lack of leadership and the amount of breakouts that are coming on low volume. This isn't surprising considering the damage done in the last few months. Bottoms are a process, and it can take weeks, or months, to complete (not that I'm saying we have bottomed. I have to confess I've been watching CNBC videos on the internet and there is incessant bottom calling going on there).

LPHI was last weeks big gainer. Last Friday it had gapped below support, but closed above it, which is a fairly bullish sign. It then spent last week going almost straight up, but on average volume. This Friday it hit resistance and pulled back. This is in a base building process, and I wouldn't be surprised to see it in the big decliners next week.

HS was the second biggest gainer, and is also in the base building process.. Last Friday it was stopped cold by the 50dma. On Monday it pulled back a little, and Tuesday it blasted through, which would have been a pretty good entry point. It has been rising on increasing volume and could possibly challange the old high before the next pullback.

CRN was last week's biggest decliner. At first glance there's not too much to love here, but notice CMF has stayed positive. This is probably trying to build a base, and has a history of getting some big bounces of support, which it is very close to now. Just make sure it doesn't break that support.

CVX was the second biggest decliner. This is trying to recover from what was basically a crash in October, and it will take some time. One strategy I heard recently (not sure where) that makes some sense is to buy high divendend paying oil companies, which will struggle price wise for a while, but will make up for it in dividends. Then, when the price of oil reverses, these stocks will rebound sharply. I'm not a long term investor, and pay no attention to dividends, but that actually sounds like a sound strategy.

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