Stocks to Watch

• Posted by Joe Fahmy
• on February 17th, 2010

As I continue to wait patiently for the market to prove itself, here are some observations:

1) The light positions that I took over the past week have worked out well so far: $NETL $CAGC $ISRG $GMCR $NFLX.

2) I took some profits on $NETL into strength on Tuesday and it pulled back on light volume Wednesday. It's always a good sign when stocks breakout on strong volume and pullback orderly on lighter volume.

3) The NASDAQ Composite rose on higher volume on Friday 2/12 and Wednesday 2/17. They were not big up days, but still a subtle sign of accumulation.

4) Steady put buying shows me that sentiment remains negative. I always pay attention to investor psychology because "the market tends to fool the majority."

5) Many stocks are trying to build the right side of their bases. I'm not recommending to buy them now but to keep them on your watch list if they "setup" and offer decent low-risk entry points. Examples include: $V $AAPL $ATHR $CLW $FIRE $ARST $IMAX $INFY $CLNE.

6) My stronger ideas that could breakout soon include: $IPXL $EVVV $HGSI $GMCR $MNRO.

I still suggest to remain patient as the market needs time to carve out proper bases. I wouldn't be surprised to see a "choppy" environment over the near-term for two reasons. First, the NASDAQ may run into some resistance now that it has rallied back to its 50-day moving average. Second, part of base building involves volatility and shakeouts. That's why I would rather wait for more stocks to continue to build their bases and buy them at the proper "low-risk entry point" rather than buy them now and possibly get shaken out. My best advice is to continue to keep positions light, cut losses on your weaker performing stocks, and wait for more signs of health before increasing your investment levels.

Please keep in mind that the purpose of this blog is to help people with idea generation. If you trade some of these stocks, PLEASE, PLEASE, PLEASE use stops. In other words, if some of these stocks turn against you and the market doesn’t cooperate…protect your portfolio! Thank you. Good luck trading!

Follow me on Twitter @jfahmy

Tickers: AAPL, ARST, ATHR, CAGC, CLNE, CLW, EVVV, FIRE, GMCR, HGSI, IMAX, INFY, IPXL, ISRG, MNRO, NETL, NFLX, V

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