Technically, we remain in a very strong uptrend, but my gut is telling me we are getting to a point that a quick, sharp selloff could be coming soon. My gut has been wrong many times so who knows, but I do think we are a bit extended and could use some rest soon. Basically, I don't know if I would be entering into many new longs at this juncture. If we get a few days of consolidation, then I think we're back to buy mode but right now, I think being a bit cautious is smart.
Although the market acted very well today (the Nasdaq in particular), I also don't like the way some of the stocks I have been watching acted today and as such, it's another reason for me to be a bit more cautious at this juncture with the overall market. Names like TDSC, WYNN, BOOM, SCSS, VIP, and YOKU did not act well today and that is a small warning sign to me.
All of my signals remain on "buy", but I took profits in one position this afternoon (sold MGIC at $8.33 for a 15% gain after entering at the end of Thursday's session - mentioned this chart here and here.) I entered one new position this morning off of a "Breakout Candidate" signal from Friday, but it reversed and closed flat and I don't know that I will be holding it much longer.
There is one name that appeared on all three of my long scans today (and that's a good sign) so I may look at that name but overall (besides solar stocks, of which I am already long) there really wasn't anything else of interest in the scans. That is also a bit worrisome.
Chart from Telechart, Courtesy of Worden Brothers, Inc.
Overall, I still have five long positions, but my stops are set so if we do see a pullback, I will only be taking a small loss on one of them. There is only one position right now that I am really willing to let pullback a lot, as I am up 33% in this name and bought it off of a bottoming pattern, not a breakout pattern. One of the reasons I sold MGIC today is that it has already had such a big move from November to now that I think a reversal is much more of a possibility in this name so it was simply more of a short-term trade. If we see another big move up tomorrow, I may look to take some profits on other names I have.
Thank you to those readers that sent emails or left comments about this weekend's post. I don't know where I will be going from here, but it is something I am just going to think about as time goes on because I have some conflicting feelings so we'll see what happens. Take care and good luck Tuesday - it'll be interesting to see if this market does rest or just keeps chugging into higher ground.