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Charts courtesy of stockcharts.com

Saturday, March 3, 2012

Leader Charts

The rankings on the leadership list changed quite a bit after yesterday. We had been having a pretty good week, but a few of them took some nasty drops. MHS was the biggest gainer, having gapped  up on earnings early in the week, and has built a bit on those gains. The price relative line broke out with price and has stayed high since, so this stock is showing some strength here. I calculate a target her of about 70, which it almost hit right after the breakout, but with the gap this is probably going to establish a new trading range. Here is one I made a proper buy on: I placed a limit order just above the low of the first hour of trading. I didn't really want to buy it so I put in an order I didn't expect to get filled, but it did, and for once I bought a gap up that was not too extended from the breakout point. 

LULU was the second biggest gainer.On Thursday we  had a big move by several retailers, including this one, otherwise this would not have don much this week. That got it into the upper half of the trading range it is carving out here, the top of which looks like about 76. That may seem a little high now, but I have been burned to many times not believing what I saw in the charts. The price relative line, which had been fairly weak, is gaining strength.

Right up until yesterday USHS had been by far the biggest gainer, but lost it all in one day, going on the become the biggest decliner. I had been looking to go short on it on the way up, finally getting frustrated and deciding, on Thursdsy, that I was going to stop watching it.  I should have known better.
 What I should have done was short it in the way up, with tight stops (2-3%), and keep doing it until it doesn't get stopped out. hopping the one gain was enough to offset the losses.

MDCO was the second biggest decliner. After gapping up and forming the dreaded black candle, mit has pulled in and filled the gap. This chart is a little tricky to interprete, because this exceeded the target I had projected for it, which may be why it has had so much trouble on two breakout attempts. However, gap fills are usually pretty good buy points, and the price relative line here is actually not too bad. CMF got skewed by the black candle day, but the volume pattern itself is not too bad. Overall this one has potential but I suspect there will be a lot better opportunities elsewhere.

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