Frenzied buying cools down | stockbee

9/26/2007

Frenzied buying cools down

  • Indices are forming what technical analyst call bull flag.
  • A narrower set of stocks are leading the action as per Market Monitor.
  • A pocket of momentum stocks are dominating the action. Large cap technology has been performing well. Medical technology stocks have recently started breaking out and possibly provide future leadership. While transport is in downtrend, shipping has been doing very well.
  • The star sector so far is China. There is a frenzied buying in these names and now stocks even remotely connected to China are having 10% plus move in a day. Many of these stocks which have run up 100% plus in few weeks are now vulnerable and some already are reversing.
  • For the rally to continue once this pocket of momentum slows down, what next. Which group will take on leadership is the question. New leadership has been emerging a bit slower and that is a concern area.
  • Other concern area as per Market Monitor is for two days in row buying and selling pressure was matched.
  • Quarter end dynamics should kick in soon and some of it is already visible with a rush to dump under performers and frenzied buying in some large cap tech names.
  • There are trouble spots and signs of trouble but as of now bulls are in control and it has been extremely good time for trading . All the methods I trade have been producing some very big winners.