Thursday, March 1, 2012

Cautious Here But Still Seeing Setups

The past two weeks have not been kind to my account as I have been caught in many whipsaws and stocks in general just have not acted as well as they did through most of January.   I think there are several reasons to be cautious here.  The type of sell off we saw yesterday in gold and silver was crazy and could very well be a sign of trouble to come.   Small caps continue to lag and have now closed two days in a row below their twenty day moving average after they failed to bounce today and closed at their lows.  Fewer and fewer stocks are breaking out and showing momentum.  There are spots of momentum every day, but they are very small spots - nowhere near what we saw in January.   My breadth indicator is neutral as of now and is close to turning bearish (although today's move will help a bit).   All in all, this market is looking "iffy" to me and after yesterday's close, I was in cash.

All of that being said, I am not denying the possibility of the bulls taking this thing even higher at any point.  I am not bearish, just cautious.  I saw some nice setups in my scans tonight which are shown below.   I am still willing to go long here as I did today with one position.   I just don't think I am going to be as aggressive on the long side as I would like to be simply because of the aforementioned points.

DNKN
 FRAN
 JVA
 LNKD
 LPR
 MGAM
 RAX
 STAA
 TLM
 TSLA
All Charts from TC2000, Courtesy of Worden Brothers, Inc.

It's possible we're topping out here, but this could also  just be part of a slight correction/rotation in the market that will eventually lead to another leg higher.  Once individual stocks start acting better, I will be jumping on board and hopefully having gains like I did in January.   Let's see how some of these charts above act over the next few days - if they trigger and see follow-through, that will be a great sign.  If they do nothing or whipsaw, then I would be even more cautious.    Good luck Friday.

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