Mike
03-21-2016, 09:21 AM
The NASDAQ has been up five weeks in a row; this often leads to a reaction.
I note that crude oil futures have rallied into the 40-week moving average; will this cap the move? Weeks ago, Pascal analyzed the correlation between oil and equity prices with the observation that low crude oil prices places a risk of default on lenders. At higher crude oil prices this risk diminishes and perhaps the correlation weakens. If the crude rally is finished and we drop to lower prices, the relationship could strengthen placing pressure on the equity markets.
I know of an experienced CANSLIM investor who has gained traction in this challenging market by only buying liquid stocks with pristine fundamentals that breakout with a minimum of 100% greater than average volume. In fact, he has done quite well with holding periods averaging 212 days. Limiting the portfolio only to contain liquid high volume breakouts means you are limiting yourself to stocks showing visible institutional action, a recipe for success. With less liquid stocks, he wants breakout volume 300%-400% above average.
Watch lists are updated. On the long watchlist, I have four stocks: AYI, NVR, STMP, and ULTA. I have a caveat, STMP broke out of a cup base on volume 318% above average and then proceeded to close last Friday below the pivot. I expect institutions to support the buy price by Friday close. Had I purchased the breakout, I would have sold it last Friday. So now, I need to see obvious support before I am interested again.
On the volume trigger alert page, there is a column showing extrapolated end-of-day volume. This figure could be used to compare with average volume to judge in-progress high volume breakouts.
I note that crude oil futures have rallied into the 40-week moving average; will this cap the move? Weeks ago, Pascal analyzed the correlation between oil and equity prices with the observation that low crude oil prices places a risk of default on lenders. At higher crude oil prices this risk diminishes and perhaps the correlation weakens. If the crude rally is finished and we drop to lower prices, the relationship could strengthen placing pressure on the equity markets.
I know of an experienced CANSLIM investor who has gained traction in this challenging market by only buying liquid stocks with pristine fundamentals that breakout with a minimum of 100% greater than average volume. In fact, he has done quite well with holding periods averaging 212 days. Limiting the portfolio only to contain liquid high volume breakouts means you are limiting yourself to stocks showing visible institutional action, a recipe for success. With less liquid stocks, he wants breakout volume 300%-400% above average.
Watch lists are updated. On the long watchlist, I have four stocks: AYI, NVR, STMP, and ULTA. I have a caveat, STMP broke out of a cup base on volume 318% above average and then proceeded to close last Friday below the pivot. I expect institutions to support the buy price by Friday close. Had I purchased the breakout, I would have sold it last Friday. So now, I need to see obvious support before I am interested again.
On the volume trigger alert page, there is a column showing extrapolated end-of-day volume. This figure could be used to compare with average volume to judge in-progress high volume breakouts.