Weekly Watch List


OCN (3/17/13, +15.59%)
LYB (6/16/13, +0.00%)

Additions:
LYB (6/16/13, +0.00%)

Subtractions:
None

Last week the major U.S. indexes resumed their recent downtrend. The S&P 500 and the NYSE composite each gave back 1.0%, the Dow lost 1.2%, and the NASDAQ dropped 1.3%. After Tuesday’s sell off, the IBD outlook was changed to “market in correction”. But then, after Thursday’s gains, two days later, IBD inexplicably threw their own rules out the window, declared Thursday as a follow through day, and upgraded the IBD outlook to “confirmed uptrend”. Normally, a follow through day can’t occur until at least the fourth day of a rally attempt. IBD claims that the “rally attempt” started June 6th, while the market, albeit under pressure, was still technically in an uptrend. How they can justify counting rally attempt days, in order to potentially call an uptrend, with the market still in an uptrend, while at the same time counting distribution days, to potentially call a correction, still has ne scratching my head. IBD/CANSLIM, is supposed to be a disciplined system of investing rules with market direction calls being a key element. Although any investing regimen need to allow for some flexibility, IBD, in my opinion, has stretched any such flexibility to the point of breaking with this latest uptrend call and Friday’s negative market action certainly didn’t do anything to support their decision. So, the market’s in an uptrend and the go long lamp is lit, although I would suggest correlating your enthusiasm for making new purchases with your degree of confidence in this latest “confirmed uptrend” call.

This week one of the watch list stocks is currently in a proper buy range. LYB, trading at $67.42, is still within 5% of a $65.79 buy point off of a 1st stage base on base pattern.

/as usual, your mileage may vary, always do your own homework

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