The rally continued on Monday, and though the market internals were not quite as strong, the McClellan Oscillator rose further to +81, but it is still below the early April high at +88. The Dow Transportation Average once again led the Industrials as it is approaching the all-time highs. The S&P 500’s five-day winning streak is the longest since last October.
The S&P futures have had nice gains since last week but their volume has been declining over the past three days, consistent with a loss of upside momentum. Therefore, I am looking for at least a short-term pullback in the next few days. This should be a buying opportunity in those stocks and ETFs, which are positive technically like the two large-cap ETFs I recommended last week.
Such a correction would help soothe the market bears and encourage some traders to bottom fish in the beaten-down biotech and Internet stocks. The market is focused on the widely anticipated earnings on Thursday from stocks like Apple, Inc. (AAPL) and Facebook, Inc. (FB), but several other big names report today and tomorrow.
Many investors are often tempted to buy some of the high-flying momentum stocks that traders love. A look at the charts of Chipotle Mexican Grill, Inc. (CMG) or Intuitive Surgical. Inc. (ISRG) will make it clear how they could seriously damage a portfolio’s performance.
Why Investors Should Avoid Momentum Stocks
Nessun commento:
Posta un commento