Institutional investors appear to have taken last week off and so attempting to read much into it would just be inane, wedging action notwithstanding. Sentiment has gotten pretty negative, however, which makes me wonder about whether any imminent negative reversal really could be in the cards. It may take some time – that is, if it happens at all.
While the evidence up to this point indicates that this past week was nothing more than a “short-covering” snap-back, it is important to take nothing for granted and to at least admit the possibility that we could run even higher from here. Again, warding off biases is part of the job description.
So with that in mind, here is a list of stocks that, while certainly not perfect, are either basing, holding up well, or that have already broken out:
The strongest stocks tend to run in groups, so I’ll also include a partial list of these:
If this market has anything going for it, it’s that nobody believes it can rally; while this is hardly reason to get long here, it is something to consider should you find yourself itching to short something beyond all recognition.
Still, the short targets remain the same:
Having achieved over an 83% return since early May by working exclusively on the short side, I have since covered all my short positions; unfortunately, I did this in too pedestrian a way and it ended up costing me a few percentage points more than I would have liked. The account is now up 69% for the year. As they say, you live and you learn.
Earnings are upon us, so stay alert!
Disclosure: Long: VMW, BRK.B