Some of the recent leadership stocks have taken a breather and many smaller company stocks are struggling to make new highs. Amazon (AMZN) and Microsoft (MSFT), two former leaders helped to propel the Nasdaq higher early on but the Nasdaq as a whole fell into negative territory after an initial surge.
If you look at a multi-year chart of Amazon, you'll see that it is a breakaway gap and if the stock manages to pull back, would present a good entry point (from a technical standpoint).
A few other stocks that have good patterns that could merit a closer look include Aeropostale (ARO), ChinaCast Education Corp. (CAST), ChinaEdu (CEDU), Duoyuan Global Water (DGW), and Longtop Financial Technologies (LFT). Disclosure, I own shares in all of these along with some clients.
I hear a lot of talk about the need for a correction, comparisons to the post 1929 market crash, and that we may have to revisit the March lows. The jury on this is still out. Market sentiment isn't too extreme right now but you need some enthusiasm from investors and we are coming off of historic pessimism.
For now we'll continue to sit tight and make any adjustments as necessary. However, I'm reluctant to sell any of the dividend paying stocks we were able to transition into near the market lows since the yield on initial investment is so high in many of these.
Arthur Daret