The leading stocks have been strong for the last three weeks, with many positions showing profits in the high single-digits to low teens. Since stocks don’t go straight up in one big move, several pullbacks along the way should be expected. The key here is to be able to spot weakness or strength in the pullback. Is the stock undergoing heavy distribution or is there minor profit taking? When leading stocks experience a pullback, we should base our analysis and decisions on the weekly chart. The weekly chart smoothes out day to day volatility and is the best way to handle a big move properly. In fact, how our stocks ride through a profit taking period and even a mild correction, can confirm where the big money is positioned. Institutional money will step in to support the leading stocks. If we entered a position properly (buying at a proper entry point on the chart) and have a good average cost basis, then a pullback is where we might add a little to the position. 

 

Best returns,


Scott O’Neil

President

MarketSmith Incorporated

Follow Scott O'Neil at Twitter.com/WScottOneil