Leader Charts

The market took a pretty severe beating last week, and you can see it reflected in the leadership list. There were only two that had positive weeks (both at less than 1%), and 5 that lost more than 5%. If you had to guess which two would be the best on the week, you would probably guess AAPL and CMG, and you would be right. AAPL, in particular, has what just might be the strongest price relative line in the market, so it should come as no surprise that it has been holding up quite well.it broke out on Monday, but pulled back in to just below the breakout point when the rest of the market collapsed. it is now in a perfect buy point, assuming the rest of the market cooperates. Unfortunately bear markets eventually come and get everything, and if this one continues, it will get this.

CMG was the other gainer, and also had a breakout on Monday, although technically this one was a failure. This also had a breakout in price relative on Monday, and price relative has been rising since despite a fairly sharp drop in price. Again, this is more at the mercy of the overall market than it's own merits at this point. 

 

There is a section of O'Neil's book (I will see if I can find it later) where he discusses bear markets and why breakouts should not be bought during them. Basically, it comes down to stocks forming faulty chart patterns which end up in failed breakout attempts. 2 weeks ago, CF looked like it could do no wrong, but at the time I pointed out some of the flaws in the base it broke out. It has since collapsed, but seems ti be finding support at the 200dma. Under ordinary circumstances that would be a tempting entry point, but with the market not cooperating this might not hold here.

 

EGHT was the second biggest decliner, and it aslo has a [retty bearish chart pattern. It was trying to form a cup and handle that was seriously flawed. The right side of the cup really did not come up high enough before it stopped to form the handle. The handle itself is moving upward from  left to right, and is a "wide and loose" pattern, with some big price swings. Ideally, handles should ecline slightly in price while volume drops and price stays in a tight range. Fortunately it broke down before attempting a breakout, so it never set the bull trap.