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Saturday, February 7, 2009

IBD 100

This week's "Inside the 100" column is about the most optimistic I have seen in months. However, they are pretty consistent in their investing philosophy. In IBD's view, the market is
either in a confirmed rally or it isn't. Whether this is a bounce, a bear market rally, or the start of a new bull market is not known, nor does it make a difference. Here is what they say:

"Given that, the way to play a confirmed rally is to find fundamentally strong stocks clearing buy points, and take small positions. You don't guess. You want to let the market tell you whether to increase your position or abandon it."

TDG wa last week's big gainer. As of last Friday, it was pulling back nicely to support, which normally would be an entry point, but Monday looks like an earnings gap up, and I never enter just before earnings, which reduces the gain substantially, but also reduces the risk. CMF is skewed down because of the selling pressure after Monday's gap, but since then it has been moving up.
There is a descrepancy between my data, and IBD's. They have HS as the second biggest gainer, and I have PSE. They make no mention of PSE at all. It is possible I had a typo, but this has happened before, stocks just mysteriously disappear. I think I still have last week's issue laying around, so I will check and see if PSE was on last week's list when I get a chance. This is another one that was setting up nicely last Friday, and got a slight increase in volume last week, sending it up.

DLTR was last week's biggest decliner. Not only do I not buy stocks just before earnings, I also usually get out, or take most of my position off, before they report. This was in the process of forming a handle when it reported, a perfect breakout setup, but the market didn't like what it heard.

INSU was the second biggest decliner. This was also forming a handle when it broke down, and judging from the volume, it looks like earnings. It is interesting that both of these stocks has bigger than normal down days the day before they reported. If I wasn't so paranoid I would call it a coincidence.

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