Leaders Under Pressure

• Posted by flare9x
• on May 17th, 2012

Many names in the Stocktwits50 list are under distribution. Early warning signs were showing in $APPL and $CMG as they reversed from their peaks on the largest distribution volume since the beginning of their moves.

$TRAK is a base that has been developing and despite showing signs of strong demand and gapping up. It has since shown looser price action and has been under distribution on the right side of it’s base.

$FTK looked to emerge from a 16 week base, however the break out was met with heavy selling pressure and the stock proceeded to break down.

$RGR completed a head and shoulders topping pattern. The first warning sign was the churning day: heavy volume with very little price progress. Distribution quickly followed. The right shoulder was lower than the left shoulder where there was not enough buying demand to push the stock any higher.

$V is a base that has been developing and is starting to look vulnerable on the right hand side. The largest distribution day since the move appeared on the 3rd of May. Following this day there has been above average volume distribution days. Remember a constructive base should show little to no distribution on the right side and if we see this type of action its a possible warning sign going forward.

$BYI and $FUL are names that were showing relative strength to the market and were trading within their highs. However, they are breaking down from the right side of their bases. This type of action is testament to the current market environment where eventually the weakness gets to everything.

There are some pockets of strength in the ST50 list. $SXCI is showing relative strength and is resisting the down trending market. $SWI and $CATM are holding onto strong earnings gaps. This strong action suggests that sellers are not distributing their shares. It is however worth noting that in this environment (depending on your timeframe) holding long is very high risk with the possibility of the market weakening these names also. This is an environment where stocks are breaking down 10%+ from their bases and a market where any weakness in an earnings report is met with a severe sell off. Therefore, it makes sense to wait for conditions to stablise and of course if deciding to trade anything long, start out small and gradually build up your position size on the back of your small success’s.

 

 

 

 

 

The information in this blog post represents my own opinions and does not contain a recommendation for any particular security or investment. I or my affiliates may hold positions or other interests in securities mentioned in the Blog, please see my Disclaimer page for my full disclaimer.

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