While many commentators are advising caution, reducing risk, or taking profits, we continue to find new buying opportunities. We’re not deliberately trying to be contrary to the misplaced fear over Cyprus or other supposed headwinds facing the market and economy, we’re just following our process and executing ideas as and when they present themselves. Price dictates what would do. Not news stories, media opinion, or hearsay.
Trend following effectively acts as a filter for finding market leaders. You need take no meaning from what buy signals for those stocks might say or imply about the health of the market or economy. If forced to read something into the names appearing on our radar recently, it’s probably fair to say they are more defensive in nature; healthcare, consumer goods, consumer staples, things like that. We also still have all four longs in utilities.
What does that mean? No idea. Don’t care. I’d guess some would say that it’s not a good sign that defensive stocks are leading, others might say a rising tide lifts all boats. All that matters is there are still a lot of strong uptrends out there in a market that remains in an intermediate and long-term uptrend. Those are the names you want to have working for you, and if they’re offering some low-risk entries we’ll be happy to participate.
Currently we have 27 open positions (4 losers, 23 winners), the performance of which you can see here in our latest weekly review. Here are two more names we’ll be adding at Monday’s open:-
$CERN is in a strong long-term uptrend that extends back well beyond the 18mos shown on the weekly chart below. It’s noticeable that the move through prior resistance to all time highs has been on increased volume, in 7 of the last 12 weeks in fact. That $88.10-$88.41 level may act as first support, but at this stage it would take a break of the wider $82.64-$85.38 area, that marked the highs of 2012, to invalidate the longer-term uptrend. The second chart shows the last 3 months in greater details on a daily chart. We saw little conviction in any selloff last week, with Friday’s action reversing all weakness to end at an all time high, again on increased volume.
Packing Corp Of America ($PKG)
Another great example of a solid uptrend. Whether looking at over 18 months or 18 weeks the charts look the same. $PKG is having another shallow pullback that provides us with a low-risk entry. A clean break and close below that $40.64-$40.87 area which currently also houses the 50-day would invalidate our rationale.