3-13-2016 Comments

I updated watchlists.

I have no conviction in the current market. The indices are rallying and look good. CANSLIM selects stocks with great fundamentals. Some of these have moved up a bit, but they are not really participating in the rally. I would expect in a growth stock oriented rally that we would already have multiple stocks up more than 20% from a proper pivot point.

When a weak rally happens, I tend to sit on the sidelines or play lightly. Still I create watchlists, but these lists are not recommendations. Sometimes the operative term is "watch". I own MTSI, which is doing just fine. Nothing on the short side is working. AMZN is on my short list. What I like is that it has moved up in a weak rally into the 50-day. What I don't like is that it has started a pattern of higher highs and higher lows. The short candidates are rallying, sometimes more that my long candidates. So, I don't expect to start a short this week.

We are news driven; Mario Draghi whipsawed the market on Thursday. I cannot today predict what the reaction to news will be. When we have a trending market, we can predict the result of the News; the trend will continue. Until we have a demonstratively trending market, times will be difficult. Nothing has changed since I drew head and shoulders patterns on the major indices. We have a very long way to go before this prognosis changes: we need to break to new all time highs before the H&S pattern breaks. Of course there is another possible outcome, the H&S pattern might just play out to the downside.