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Stock Up on Stocks

Quint Tatro Apr 13, 2009 11:30 am


		Don't fight the run of the market.

The markets have run a great deal. And despite what bears may want you to believe, the simple truth is yes - it could easily continue. Rather than look at fighting it, why not start building a list of stocks you want to buy that are exhibiting excellent technical improvement.

The key is to always identify and set your stops accordingly - most importantly, never being afraid to take a stop, as that's what they’re for. If the market continues to move higher, you’ll participate; if it doesn’t, your stop will protect the severing of any major limbs. Here are some I'm looking at going forward.

I bought Morgan Stanley (MS) on Friday, as it broke above the key line noted on the chart below. With a stop at the 50-day, the risk reward here is in my wheelhouse, and any digesting around the $25 level will have me building.

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Boeing (BA) recently skirted death and has recently not only improved its technical condition, but broken out of a trend line going back to January. The volume on Thursday indicated accumulation, and I suspect after some minor retracement, this stop will be poised to head towards its January highs. With a stop at the death line, also correlating with the 50-day, this is a name I'm looking to build this week.

Click to enlarge

Analog Devices (ADI) is a semiconductor that seems to be a bit slow in participating with the partial bear-stomp we’ve seen of late. This either means the stock is flawed and lagging for a reason, or it could be that it's just flying under the radar, awaiting its real move. As you can see in the chart, the stock has notched a head-and-shoulder pattern on the daily chart - often a topping sign. If this pattern fails, however, it may catch many off-guard, leaning the wrong way and sparking a decent rally back towards the mid-twenties. I'm looking to initiate a position on a light volume move back towards the 50-day, with a stop on a break of the April 3 low of $19.36.

Click to enlarge

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In memory of our fallen friend and trusted colleague, Bennet Sedacca, 100% of the donations made to the RP Foundation through April will be channeled to philanthropic endeavors consistent with the RP mission, working closely with the Sedacca clan in the distribution of those funds. We thank you kindly for your support as we strive to effect positive change in the lives of children.

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