All About The Falling Leaders

The following is an excerpt form the mid day update by All About Trends. Premium members receive daily market commentary, stock picks, and a concise trading plan. I personally recommend their service for their insightful content and amazing value. Try it here at a significant discount.

Heck the 50 day in the face of fear or on an earnings announcement slam gets us interested in this on the long side. Now let's look at a few of the “Follow The Out Of Control Screamers” which by the day are getting more and more not out of control.

4-16 See the pink line bear channel? Folks, today they are getting all the out of control stocks that were extended to begin with. These are the leaders and they never offered you any low risk Pullback Off Highs (POH) entry point to speak of anyway, that and we never really saw a “Grand Slam” to the 50 day either. Now? We may very well be on our way to that type of entry- a Gland Slam to the 50 day in these and others like it. We'll see and only time will tell.

One thing we want to caution you about out there in cyberland and blogosphere is to be aware of the sensationalists. Just because these leaders are pulling back to the 50 day does not mean the market is cooked just yet (think a market of stocks). These issues could easily continue to pullback some excess and take another run at their most recent highs, its just a matter of first seeing what they do at the 50 day should they get there. Let's get to that level first before we go trumpeting that the market is cooked. Sure we are pulling back some much deserved excess but we still need to honor this being a Wave 4 pullback.

Also keep in mind that money stays in the market and rotates around so if money is flowing out of these names it could start to look for a home in other newer emerging names. Think “Who haven't we ran yet”, here too we'll see.

So what are we going to do about all this? Simple, sometimes the best trade is no trade and that means no buying, no selling (unless you own those out of control leaders then you probably should have been selling some on the way up just like wall street sells greed, think get out while the getting was good) no selling short.

As Robert Schuler once said; “Don't quit, Don't split, Just sit.” So that's what we'll do here. That and keep scanning for names that are setting up all the while being mindful or our positions.

Lastly, it's earnings season and make sure with anything you do you know when earnings are due before you do anything long or short, buy or sell.

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