Watch the Big Caps

• Posted by Joe Fahmy
• on December 9th, 2009

The Big Cap growth stocks continue to act well. Even if you do not trade these stocks, observing their price action can give you decent clues about the market’s overall health since this is where the large institutional growth managers traffic. As I have mentioned in the past, many large funds are significantly under-performing the major indexes. Since their universe of growth stocks is limited, they have no choice but to “plow into” these stocks when they are “chasing” performance.

1) $AAPL recovered on strong volume to close above its 50-day moving average, $BIDU bounced off its 50-day and 10-week, $PCLN $GOOG $ISRG all held their 20-day, $GS has found decent support in the low 160 range, $AMZN was down but it can't go up every day.

2) Even the "old school" big tech stocks are holding up well: $CSCO $MSFT $INTC

3) One major negative about Wednesday's market was the low volume.

4) I am still recommending caution, however, as I mentioned in yesterday's blog post, the market has been incredibly resilient the past 9 months. My best advice is to keep trading positions light, not to get too aggressive on the short side, take profits into strength, and look to buy back stocks near logical support levels such as the 20-day or 10-week moving average.

5) If the market cooperates, here are some stocks that could breakout of bases or short consolidations: $FFIV $MELI $CGA $CAAS $GRA $XRTX $SKX $HMIN $WX

6) Don't forget the Gold Stocks. Many of them have pulled back to decent support levels as gold has corrected from approximately $1200 down to $1120/ounce. $GOLD $IAG $TCK $JAG and $GLD (the gold ETF) are all worth watching if gold is to recover back to its highs.

7) I can't reiterate the importance of trading with stops. ALL the best traders in the world say "cut your losses." Protect your portfolio if the market doesn't cooperate!

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Tickers: AAPL, AMZN, BIDU, CAAS, CGA, CSCO, FFIV, GLD, GOLD, GOOG, GRA, GS, HMIN, IAG, INTC, ISRG, JAG, MELI, MSFT, PCLN, SKX, TCK, WX, XRTX

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