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Saturday, July 31, 2010

IBD 100

Last week, I noted that the IBD 100 had several large gainers and very few large losers. This week, it's the opposite, as there were several big losers and only a handful of large gainers. JOBS was last week's biggest gainer, and is a stock that, despite a reent increase in average volume, still is running on vapors. A stock that trades this thinly rarely develops really good chart patterns, and this is no exception. Had you bought it last Friday (blue arrow) you would be sitting on a decent gain right now, but there was nothing in the chart indicating that this was a buy. It was really just a crap shoot. And you didn't get a good looking waitress bringing you free drinks.

KWR was the second biggest gainer, and is building the right side of a pretty well formed base. Volume increased as price climbed up, which is a classic bullish sign. This will probably start forming a handle soon, and if it does on light volume, with a declining ATR and rising price relative line, then this will probably have a pretty strong breakout.

VLTR was last week's biggest decliner, and got hit on earnings, which is too bad because it was in the process of forming a very nice base. Here is another example of why O'Neil never tries to anticipate breakouts. This bounce right off the 200dma, which is a tempting entry point, but a little too obvious. I wiould wait a few days to see if this settles down and holds the 200 before even contemplating an entry, as this is still a falling knife.

AKAM was the second biggest decliner, and also got hit on earnings, but the pattern here wasn't especially bullish. Even though it was holding the 50dma, the price relative line was weakening and CMF had one quite negative, indicating some big money boys were getting out before earnings.

Here is the current distribution day count in IBD: SPX and DOW 3, Nasdaq 2, NYSE composite 1.

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