The following two videos contain some stocks on my watch list. 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 any of these stocks turn against you and the market doesn’t cooperate…PROTECT YOUR PORTFOLIO! Thank you and good luck trading!

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Follow me on Twitter @jfahmy
Follow me on StockTwits @jfahmy

1) I never thought the Market went into correction in the first place because I only counted 3 recent distribution days on the NASDAQ Composite. I mainly focus on the NASDAQ because it is THE LEADING INDEX and it’s where the majority of winning stocks come from.

2) I’m not a big fan of looking at distribution on the Dow because I think it is THE WORST index to follow and I haven’t traded a stock on the Dow in over 10 years!

3) Over the past two weeks, I have owned between 14-16 stocks for my clients. That is the most number of positions I have owned in a long time. Other wise traders I know have been on margin recently. My point is there are TONS of set-ups and many of them are breaking out.

4) Examples of strong stocks include: $HSFT $AAPL $FFIV $LULU $SHOO $MEAS $TDSC $CMI $SNCR $CIS $KH $RAX $PAY $CMG. I’m not recommending to buy these stocks here, I am simply showing examples of stocks that are acting well technically.

5) The Russell 2000 is at a new high! How can the market be “in correction” when one of its major indexes is making highs?

The point of this article is not to make fun of IBD because I highly respect their work and I have a few good friends who work there. My point is: 1) Pay attention to the price action of stocks! If solid fundamental stocks are breaking out of sound technical patterns on strong volume and holding, that’s a healthy sign…PERIOD! 2) Do your own work and don’t blindly follow anyone or any publication. Use blogs and newsletters as a guide, but ultimately trust your own instincts.

Of course a few things concern me about the market, specifically the economic problems in Europe and the high bullish sentiment. However, the most important thing to focus on is the price action of stocks…and right now leading stocks are acting well. My best advice from here is continue to find high probability setups, take profits into strength, and ALWAYS USE STOPS to protect your portfolio in case your positions turn against you. Good luck trading!

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This example applies to today’s stock market. Many people are expecting this rally to end any day now, but I wouldn’t be surprised to see the market “fool the majority” and continue higher over the next 3-6 months (with corrections along the way, of course). I’m not only basing this on psychology, but also on the strong market internals. I continue to observe a large number of stocks that are acting well. Specifically, stocks breaking out on strong volume and consolidating on lighter volume.

What amazes me is vast number of sectors represented by these stocks. Examples include: Semiconductors $CREE $AIXG $VECO, Restaurants $CMG $PNRA, Retail $LULU $DECK $SHOO, Machinery $DE $CMI $BUCY, China $BIDU $CTRP, Big Caps $AAPL $PCLN $AMZN, Biotech $DNDN $HGSI $JAZZ, Natural Gas $CLNE $WPRT. The scary thing is that I could keep giving more examples.

Bottom line: I still see healthy signs overall and I continue to recommend being invested in this market. Don’t forget to take profits on the way up keep and, as always, look to cut losses on your weakest performing stocks.

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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!

Follow me on Twitter @jfahmy