Saturday, June 5, 2010

Failed breakouts...

Technically speaking, a failed breakout according the CANSLIM system occurs when a stock falls 7 - 8% below the pivot buy point after triggering a buy. Now although none of the stocks above have yet done that, I am sure you will agree that it will take nothing short of a miracle to stop this from happening based on the current price/volume action in the market indexes and leading stocks like the ones shown above. In fact, after Friday's sell off there are almost no good looking bases in leading stocks!

I cannot predict the future but it seems that we will likely be in for further declines in the near future or best case scenario side ways action in the indexes. Market conditions merit caution as the high volatility can easily lead to devastating drawdowns as the losses pile up. I am still in cash and eyeing only a very small handful of stocks that I doubt I will trade in the near future. However, the markets are dynamic and I am not for holding firmly to a particular hypothesis even though the market conditions dictate otherwise. So if the markets and leading stocks begin telling me to get back in then I will. Until then I will remain in cash.
Good luck and good trading!

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