Short Covering

Tuesday’s sharp rally reeks of short covering.

If we can repeat today’s accumulation over the next few sessions we may begin to believe otherwise.

Rallies off lows are often sharp as short sellers scramble to get out. We give them a few days to clear out. Beginning the fourth day, which is tomorrow in this case, we look for real buyers to show up. This is what we call a Follow Through Day.

Stay tuned,


Fluff The Rally

We’re officially on the watch for a potential bottom for the broader market.

Come Wednesday we’ll look for signs of institutional buying via high volume, or what we call a Follow Through Day, where an up day occurs on volume greater than the day before.

We expected some kind of rally as the S&P 500 hit its 200-day moving average.

Though we are not expecting to see a sustained rally. We’ll shift into a bullish bias if the volume shows up.

What’s more likely to happen is that the 200-day moving average be taken out on the downside. Markets always find a way to shake out holder, and such an event would do it.

See you soon,


We’re Still Bearish

Nice little bounce for the SPX off its 200-day moving average. We expect more selling, and an eventual undercut of that market, in the coming sessions.

The market does most of the talking here. Our reasoning means little.

As smart traders we take our direction from the price and volume. The market does its thing, we do ours. Stocks are kinda like waves in the ocean setting their rhythms for surfers.

FYI, we’re still Bearish.



Monday, June 16th 2011

The Growth Stock Report

Market Bias

Seller’s Edge

The Growth Stock Landscape

Easy selling across the broader market these past few weeks is no surprise to anyone.

We’re on alert for a turnaround of sorts as the S&P 500 touches its critical 40-week moving average.

Bottom Line: Haul in your profits if you’ve made money selling short.  If your strategy merits higher risk, wait for a clear indication of a rebound before nibbling on Long positions. This market is still full of attractive stocks.

It would be just like the market to stage a massive sell off in this zone, only to make a sharp u-turn on high volume as funds buy on perceived value. Watch and wait.

Market Leaders Baidu (BIDU),, (AMZN) and Apple Inc. (AAPL) have pulled back to near their 40-day averages like the major indexes. A resurgence of the bull may give way to new Leadership. We’ll watch how these guys hold the averages for further indication of overall market direction.   

No Setups made the list this week. And only one New High in FOSL.

Other Individual names making the grade for stellar growth include.

  • Polycom (PLCM)
  • Valeant Pharmaceuticals (VRX)
  • Illumina (ILMN)
  • Fortinet (FTNT)
  • Cypress Semi (CY),
  • Golar LNG (GLNG)
  • Arcos Dorados Holdings (ARCO)
  • Virnetx Holding (VHC)

Aggressive money may also want to take a closer look at the commodity Silver as it plays out a correction. This can be done with  iShares Silver Trust’s (SLV) as well as a hoist of other funds.  

Stay tuned,


DISCLAIMER: We may own the stocks discussed here. Data used here is accurate to the best of our knowledge, though may be subject to error. Trading in stocks can result in losses, which in some cases may total more than invested. Prudent money management involves only risking money you can afford to lose!