Indexes are selling-off modestly for the first time since breaking above the recent trading range. Is this a good time for people who missed the recent run to get in, or a last chance for those still holding stocks to get out at a decent price? In typical fashion, the arguments for both directions are equally compelling.
If we use the strength of the follow through day and the performance of the recent rally’s general, AAPL, as a benchmark, it seems less than an ideal foundation for a material move higher. But on the other side, the markets often climb a wall of worry and it is this very uncertainty that provides the best opportunity to buy early weakness and hold for a profit as other investors slowly come around.
I am fighting a negative bias and I don’t want to let it skew my outlook, but I still find myself suspicious of this rally. There are a lot of good stocks holding up well in this weakness, but I have yet to pull the trigger on any of them since the follow through day. FRAN is having a great day, up 5% in a continued bounce off of its 50dma. LNKD is also showing impressive strength after its own 50dma bounce. SWI is holding on to an impressive move off of last week’s earnings. On the other side, AAPL is extending a 3-day slide after its blow-out earnings. It is pushing down toward its 50dma and a bigger risk will potentially be a test of the recent $555 low. It seems at the moment everyone who wants AAPL already owns AAPL and no one is left to rush in and prop up the declining price.
Jani Ziedins (pronounced Ya-nee) is a full-time investor and financial analyst that has successfully traded stocks and options for nearly three decades. He has an undergraduate engineering degree from the Colorado School of Mines and two graduate business degrees from the University of Colorado Denver. His prior professional experience includes engineering at Fortune 500 companies, small business consulting, and managing investment real estate. He is now fortunate enough to trade full-time from home, affording him the luxury of spending extra time with his wife and two children.