The long anticipated pullback has finally happened, and MoneyShow’s Tom Aspray examines the charts for potential candidates for the market’s next leg up.
The March S&P 500 futures dropped down to test the February 7 lows at 1494.50 on Thursday (the low was 1495) and then closed at 1502. Volume has been heavy over the past two days and the A/D lines have dropped below their support as discussed yesterday.
The stock index futures are showing nice gains early Friday and a close back above Thursday’s high would be the first sign that the correction may already be over. A rally to new highs next week would catch the majority by surprise but may cause the formation of some negative divergences.
The data on manufacturing Thursday was disappointing as the Philadelphia Fed Survey was much weaker than expected and the PMI Manufacturing Flash Index showed some evidence of a slow down
In a January Barron’s cover story The Next Boom, they focused on eight stocks that they thought would benefit from resurgence in manufacturing. On the table above, I have added the closing prices from February 21, which reveals that six of the eight stocks are now lower than they were at the time of the article.
In January’s column 4 Best Next Boom Stocks, I recommended three of the stocks and two of them reached my initial buy levels on Thursday. Do these stocks still look attractive and are others on the list now worth buying?
LyondellBasel Industries NV (LYB) went ex-dividend on Wednesday and is down just over 10% from the January 31 high at $64.20.
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