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As the Market Sends Mixed Signals, Now's the Time to Hone Your Watch List


The key is to not be frozen into inaction. Consider Sarepta Therapeutics and these mortgage investment names.

There's nothing wrong with taking a stop and re-buying should the action suddenly reverse. It's a form of insurance that protects you from letting losses get out of hand.

Meanwhile, now is a perfect time to hone those watchlists and possibly nibble on some names that have pulled back towards support. The key here is to not be frozen into inaction. There has been a shift in the character of the market, and there's no telling if we're at the cusp of something more serious or if what we've seen is a period of healthy consolidation that helps set up another ascent up Ye Olde Wall O' Worry. Personally, I suspect that we're in for the latter, but right now my focus is on individual names, and I'm just not finding a lot of great setups that get my juices flowing.

One name that is high on my radar is Sarepta Therapeutics (NASDAQ:SRPT), which has been digesting last week's giant move nicely and is setting up for another leg to the upside. Some mortgage investment names like Altisource Portfolio Solutions S.A. (NASDAQ:ASPS) and IMPAC Mortgage Holdings, Inc (NYSEAMEX:IMH) are in good shape, but need time to develop some more, and while Reed's (NASDAQ:REED) is a standout chart, I'm wary of chasing much to the upside in this tape.

The thing that we need to be watching for is a failed bounce, and this morning's action could provide a good test. Market tops will invariably be processes that play out over time, and it's a series of failures that push the buyers to the sidelines. I'm not saying we've topped, but I am saying that there are some breakdowns under the surface and we're near important support levels. Be mindful of the action and don't be afraid to act.
Position in SRPT
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