I try to emphasize especially in market conditions like we currently have, that we should always look at each stock on its own merits, and avoid making snap decisions to cut all our positions because of how we might view the overall market. There are always stocks making 52-week highs or 20-day highs regardless of market conditions. As trend followers we need to constantly seek them out. Here’s one I’ve been watching which is now ready:-
This has a lot of the things I look for in a new position, a recent high, a successful test of support, and a resumption of the uptrend on increased volume.
I’m also not too afraid of the big picture on the weekly chart below. A recent test of the 10-week, and all time highs coming into view on the horizon. Those daily and weekly closing highs are at $76.26-$77.88, fairly close in fact, and I like to see something stop just shy of big levels, almost a respectful nod to what it’s about to attempt, like a horse slowing and adjusting its stride before accelerating towards the obstacle and taking flight.
And, in this difficult climate it’s got one final key factor; relative strength. Recently it’s off the charts, I had this one extended especially to accommodate it.
We want to identify stocks rising on increased volume, look for what’s working, buy strength, not weakness. These kind of stocks are often the Generals that lead the troops in the next market advance. Keep them onside.