Leading Stocks Go Vertical In Go-Go Market

For the last month or so the markets have been overbought, technical indicator after technical indicator-wise, yet they have refused to give up the ghost.  We’ve also been talking about what to do with a pullback and how to buy the leaders in an extended market.  That still holds true.  We would love to buy some of the go-go stocks on pullbacks to support and/or the 50-day average. However, in this space the market is the boss.  We started to get a pullback last week that really could have been the start of a nice pullback in order to buy off of from a low risk entry point vs. chasing them. However the indexes and many of the go-go (leaders) only pulled back to the 20 day average before taking off again.

 

60 minute charts

 

Go-Go Leaders

In Summary: Given that the market has been up for 8 consecutive weeks there is no way we can feel comfortable going hog wild on the long side. Instead, it’s all about the managing of putting new money to work risk wise and we are not going to get sucked into that kind of chasing buses mentality.

There will be a time soon and that is when we will feel good about going into some of the current leaders for a trade. In the meantime, those of you who own some of those extended go-go names mentioned above, think about locking in some gains. We are not saying to sell ‘em all off. It’s just good business sense to consider selling partial positions. Remember bulls make money, bears make money, and pigs get slaughtered.