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Saturday, March 17, 2012

Leader Charts

Another big week in the market was confirmed in the leadership list, which had lots of big gainers and very few decliners. AAPL was the biggest gainer, and the move it made since last Friday (the blue arrow) has lots of gaps, very high volume, and the signs of what O'Neil calls a blow off top coming. I have a target of 613 projected for this, and it's recent gap up to 600 might be close enough to be a top. That would have been the ideal time to go short (if you are suicidal enough to try to short this). I am going to be using this as an exercise in short selling in the Market Watch game, and will employ just that strategy: use limit orders to try to catch a morning gap, probably just above the previous day's close. Even if this drops I don't think a short is a good trade here: I don't think it will drop much and the risk/reward isn't very high here.

PCLN is a stock I had left for dead a few months ago, but for some inexplicable reason it decided to come back to life about mid January. Since then it has been on a holy tear, and I have a target of 705 projected for it. The only thing I don't like here is the drop in CMF, but that is also skewed buy the black candle formed when this gapped in February. 
FOSL was the biggest decliner, and probably the most bullish looking chart of the bunch. It is now in a pullback that is still above the 20dema, and until it breaks that it is hard to be even a bit bearish here. This one was also left for dead, started a stealth rally in early January, then busteed out in February and hasn't looked back. I'm going to be looking for an entry here.
If I remember correctly, TCAP was one of the top two gainers last week, this week it is the second biggest decliner. You can see what kind of week we had when the second biggest decliner barely moves. This is a bullish looking chart pattern, but that descending price realtive line really has me concerned.  A breakout, however, can change all that, and this has been getting a pretty good increase in volume.

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