The strong run-up for stocks in January, renewed prospects for political brinksmanship in Washington, and the crisis du jour in Europe seem to have given market participants pause, and MoneyShow’s Tom Aspray reassess the current landscape and plans the next moves.
Even though last Friday’s action was quite positive, the Dow Industrials tracking Spyder Diamond Trust (DIA) closed a bit lower for the week while the Spyder Trust (SPY) and PowerShares QQQ Trust (QQQ) managed gains of 0.5% and 0.4% respectively. The Dow Transport has continued to lead the pack, gaining 0.94% for the week.
Over the past week, the number of analysts and financial columnists looking for a correction has grown significantly. I started becoming more cautious on the market at the end of January due in part to the high bullish sentiment at the time, as well as the seasonal tendency for stocks to correct in February.
Though the now crowded correction camp does not mean that stocks won’t correct, it does increase the chances that stocks will first see another surge to the upside. As I noted in The Week Ahead column, the tech sector could fuel another push to the upside as the QQQ and XLK acted well on Friday.
For now, I will continue to stick with my game plan, that is take profits on some of the open positions in the Charts in Play portfolio and raise my stops. Since the last portfolio update, five stocks have reached my initial profit-taking levels while others have been stopped out. I would like to focus today on two recommendations that have worked out well and two others that were stopped out.
Pioneer Natural Resources (PXD) was a more recent recommendation in the energy sector that was made just before the end of 2012.The weekly chart shows that the triangle or flag formation, lines d and e, was completed in the middle of January.
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