The markets have ripped higher the past two days and it has become increasingly more difficult to find stocks at decent buy points. Traders should always be leery of buying over extended stocks as an simple retracement could put them into a position of weakness. The last thing a trader wants is to buy a stock near a high, and then be forced to sell as the stock retraces in a normal manner. Usually, this is compounded by the stock turning right back higher.
The following are stocks that are still near decent buy points and are on my watch list for the next few days.
The Boston Beer Company, Inc. (Public, NYSE:SAM) is trading in a tight range after a sharp breakout. It is showing great strength by refusing to give up any of the recent move.
Blue Coat Systems, Inc. (Public, NASDAQ:BCSI) is still trying to recover from a correction that began in May, but has recently settled into a tight range above a possible bottoming base. BCSI has quietly begun to set higher highs and a move above this tight range could send it into a price void above. Notice the vast majority of trading volume has occurred under the current price.
Hersha Hospitality Trust (Public, NYSE:HT) is a cheapie and relatively slow mover, but this pattern looks really good. HT cleared its base in October and has settled into a tight range above the base. It looks like it is trying to breakout here and the whole REIT group may be ready to resume its run higher.
The three charts above have one important commonality. They all feature a tight range above a support level. Trading a move above these ranges would be much safer then trying to jump on some of the stocks that have recently broken out like RiT Technologies Ltd. (Public, NASDAQ:RITT) or Finisar Corporation (Public, NASDAQ:FNSR).
Good Trading,
Joey
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