Watch List

This will likely be my last post before heading out for a vacation. With the market in correction the order of day is to prepare a watch list in case the market makes a real move. I suspect the market is topping and has been doing so over the last 5 or 6 months. Market tops are often very broad and difficult to navigate. CANSLIM stocks have not really been working well since the begininning of the year. Action of leading stocks is very important to reading the market. There are very many late stage bases and evidence of many prior leaders that have gone into climax runs or are failing late stage bases. Stocks like BIDU, SINA, SOHU and even AAPL are looking sick. Many leaders have reached their price target and so perhaps ready to halt their advance. I don't have time to develop the concept of setting a price target today but I will get to it in the future.

Whatever my opinion is, it doesn't matter; I will get ready just incase the market wants to make another leg up. In general though, unless the market makes a real rally follow-through this is time to be at the beach or preparing a list of stocks to short such as FFIV or FNSR. The stocks on my long watch list are the following:

GMCR, APKT, SOLR, MELI, PCLN, TPX, HLF, CRR, WYNN, M, ILMN and PPO

These are not all necessarily at logical buy points but these are the ones that are acting well and interest me in many ways. Many stocks are acting too loose in my opinion. The definition of tight is that on a weekly chart you see sequential weekly close prices cluster near the same price (+/- 1% or so) particularly near the lows of a consolidation or handle. Tight closes are signs of institutional accumulation. Late in a market advance (we are late) I pay particular attention to stocks that are showing subtle signs of accumulation such as tight weekly closes and pass up those that are not showing this trait (acting loose.) WLT is an example of a leading stock whose recent base showed no tight action. Now it looks like it could fail. WLT was one of my primary watch list stocks until I discovered the loose action a few weeks ago.