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Saturday, August 17, 2013

Leader Charts

We finally had a down week on the leadership list, overall 1.5% down and only 3 stocks making gaines, however, there were also no big losses.LL was the biggest gainer, and his is one that is holding up in the face of market weakness. It formed a short but very nie looking dowble bottom base, and gapped right over the breakout point. Last Friday (blue arrow) it was retesting the breakout point, a near perfect entry point.It probably won; be going much higher until it either gets a catalyst or the market starts another strong up trend.

BOFI was the second biggest gainer. This one was one of the strongest stocks in the market before reporting, and after reporting, it got even stronger. It is likely to get pretty volatile right now, but the price relative line continues to rise, so this will likely out perform the market for several more weeks.

HCI was the biggest decliner. This is in a low volume pullback to the 50dma, but it might be too early to ull the trigger here. We are more likely to be close to the bottom when a large number of leading stocks are bouncing off the 50dma: this may hold here, but even if it does, I don't think it will go up  until the rest of the market does. The price relative line, which was not particularly strong to begin with. is weakening.

BYI was the second biggest decliner, most of it coming yesterday on an earnings drop. This one had been very strong going into earnings. There is a phenomenon that I have casually observed over the years: a stock which is in a strong up trend that gets hit on earnings will sell off for about 10 trading days, then reverse and resume the up trend. It does not happen all the time, but often enough to make it worth while to be watching this over the next couple of weeks.

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