A large number of stocks have set themselves up for sell-the-news. AAPL demonstrated that in after hours. Let us see what happens during the regular session, but here is a stock which has rallied from 53 to 95 since the start of July rally. The stock has so much of expectations built in and has been gapping up on large volume for past few days.When I see a stock running in gaps after a long rally, no matter what the news is, it is time to be careful and expect a reversal. Usually this kind of behaviour is accompanied by a pullback or severe correction as the late stage and sometimes clueless and emotional traders get sucked in to such rallies.
The airlines is another sector which should witness similar reaction. The airline stocks have been in rally mode for some years now and had accelerated rallies in the July advance. Now with earnings coming in its time for sell-the-news.
The overall market continues to churn at this level and new sets of sectors continue to find buying interest. The railroads have had nice breakouts couple of days ago. The defense sector continues to witness new breakouts. Identifying price trends early in their price cycle is the key to getting in to some long term trends. Similarly if you are a long term holder you get good low risk entries in to earnings play if you can identify the earning acceleration very early in the cycle. Pay close attention if it is a first earning acceleration after a long time.
1 comment:
Is this time any different from when you stated back in September 06 "Apple ready for a fall" only to see it become one of the markets best performers since then? I know you were very bearish in September with comments like.. "Liquidating all stocks for major correction"..."the party is over" likewise maybe these current "sell the news" reactions are just an opportunity to add more rather than expecting a reversal, who really can predict what is the "late stage" anyway. Good luck, enjoy your blog.
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