Timothy J. Truebenbach is the
President of True Capital Management and general partner of True Capital
Partners LP, a hedge fund. He uses a disciplined model that trades on the
intermediate-term time frame. For a free trial to Tim's Nightly Stock Analysis
Report
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888-484-8220 ext. 1.
The market failed to give much ground in Thursday’s trading.
With 4 blatant distribution days for the NASDAQ and several for the S&P 500, it
is very important to watch the market’s daily action at this time.
Further distribution would most likely end the current rally that was confirmed
August 15th. We have seen earnings produce solid performance from names like
Apple (AAPL | news | PowerRating | PR Charts ) and Google (GOOG | news | PowerRating | PR Charts ) while they have negatively
impacted many more leading names such as Jones Lang (JLL | news | PowerRating | PR Charts ) and
Garmin (GRMN | news | PowerRating | PR Charts ).
This rally has returned some profits for astute investors, but if you are to get
caught in one of the surprises or fail to stop a loss within 7%, those profits
can been elusive. Leading stocks have done ok against the broad rally, whereas
we would really like to see them outperform on a significant basis.
At this point, we will be keeping a close eye on the market’s day to day price
and volume action alongside the action of leading stocks. Ideally, we would like
stocks to pullback as far as their 50-day moving averages such as First
Marblehead (FMD | news | PowerRating | PR Charts )...
...versus names like Quality Systems (QSII | news | PowerRating | PR Charts ) that cannot hold key
areas without freefalling...
Buying stocks without an exit strategy should never be done, and this market
seems to be making investors pay more for this error. Since small- and mid-cap
names usually are more volatile than the market itself, it may be worth watching
the larger-cap leaders such as Cisco (CSCO | news | PowerRating | PR Charts ), Franklin Resources
(BEN | news | PowerRating | PR Charts ) and Morgan Stanley (MS | news | PowerRating | PR Charts ) for strength or breaches of key
support. This may very well indicate what the overall market will do next.
