Healthy Signs

• Posted by Joe Fahmy
• on March 4th, 2010

After two big volume accumulation days on Monday and Tuesday, it was nice to see the market consolidate on low volume Wednesday. I always find it constructive when indexes make strong progress and barely give any of their gains back. Hopefully, you were able to take advantage of the abundance of breakouts the past few days, many of which were highlighted recently on this blog: $GMCR $CMG $NETL $ATHR $CAAS $ISRG $CTRP $CAGC $IPXL $HGSI.

Another positive sign is that many of the stocks listed above broke out on strong volume and pulled back today on lighter volume. If you missed some of these breakouts, I feel you can buy them on pullbacks to logical support areas such as their 10-day or 20-day moving averages.

My advice remains the same: If you are not invested in this market, SLOWLY get back in by buying 2 or 3 stocks. If you are invested, SLOWLY increase your market exposure by adding to your positions. The key is to do this SLOWLY! Why? Because if you jump back into the market all at once and chase extended stocks, you increase your chances of getting stopped out of your positions. In fact, I wouldn't be surprised to see the market pullback over the next day or two. If this happens, I plan to take advantage of the opportunity by increasing my investment levels. Why? Because I'm currently finding a large number of stocks that meet my technical and fundamental investment criteria and these stocks could propel the market higher over the next 2-6 weeks.

I also suggest keeping a watch list of strong fundamental companies that are building sound technical bases. Some examples on my watch list include: $CLNE $JAZZ $VPRT $GMCR $MLNX $SHOO $HGSI $SOA.

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!

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Tickers: ATHR, CAAS, CAGC, CLNE, CMG, CTRP, GMCR, HGSI, IPXL, ISRG, JAZZ, MLNX, NETL, SHOO, SOA, VPRT

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