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Saturday, October 22, 2011

Leader Charts

I noted several times this week that while the market wash flashing bullish signals all over the place, the market leaders were not. Overall the list was down for the week, and had very few stocks with gains at all. CMG was the biggest gainer, and had it not had an earnings bump yesterday, would have been down for the week. This is another of the up and handle patterns with the broken handles. The cup is pretty v shaped, which is also a flaw. Technically the breakout point here is the high of the handle, which is also the previous high, and this is still well below it. The price relative line was declining during the handle, which is the opposite of what you want to see. This may break out and go to new highs, but right now it looks like a low probability.
PSMT was the second biggest gainer, and it also has yet to hit a new high, running into fierce resistance at the previous high. Price relative is weakening and CMF dropped like a rock, and volume is trailing off. It looks like the big money boys might have already bailed out of this one.

RNOW was the biggest decliner. Last Friday (the blue arrows represent last Friday's candle) it was in the process of a breakout attempt, but turned tail this week and got hit on pretty high volume. I did not see any news that would amount for it, and it may just be a case of selling into strength. The price relative line had been steadily rising, but has now reversed.  It is at a support level, but at this point I would not bet on it holding.  

It's pretty rare to see AAPL on the top decliner's list, but the game of sandbagging earnings estimates finally caught up with them. One thing that could have alerted us that there wa a problem here was that, as this retested the previous high, price relative was weakening. Despite the drop, it sis still above the 50dma, but with the way the other leaders have been behaving, I'm not sure I would be initiating a position here, but it might be a good spot to add to an existing position.

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