The charts illustrate two insightful quotes from Joe Fahmy on the importance of embracing stock market corrections (you can watch his excellent seminar on Tischendorf.com):
"The stocks are like a spring that are ready to explode except the tension of the market is keeping them down"
"Whether its a huge bear market correction, a two to three week pullback or a one-day pullback, you have to pay attention to the stuff that's up. ... just do one simple thing: look at your watchlist and see what's green"As you can see in the SPY chart, there has been "tension" in the market since May 1st as the index dropped over 100 points, including sharp one-day selloffs. Meanwhile, the individual stocks shown below held up well. Some giving back more than others (e.g., VSI versus LULU). But they all share on common attribute: once the market tension released, the individual stocks shot up to new highs.
A few of these leaders made new highs as the market was bottoming, revealing tremendous relative strength: VSI (Vitamin Shoppe), LULU (Lululemon Athletica), JVA (Coffee Holding Co.), MCD (McDonalds).
Question to Fahmy: What are the tools we have to use?
Fahmy's Answer: You just have to pay attention.
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Related Posts
- The Short List
- Focus on the Best Stocks
- Why all-time highs outperform
- Joe Fahmy Trading Seminar on Tischendorf.com
- Van Tharp on Stalking Your Next Trade
- Looking for Relative Strength
1 comment:
spot on love your analysis.
The guy from http://www.forecastfortomorrow.com/trading-club stated today taht we are at some critical resistance points and posted a chart of the trannies, hmmm intersting. His stuff is killer.
Can see a case for both sides, but I am more wondering if they have a plan for screwing the bulls partying here. Hmmmm. Greece is not the only one in trouble.
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