The staff at Briefing.com puts together a list, which features names in their proprietary Focus List of the most liquid, high relative strength stocks in the market that are ideal for day and swing trading candidates.
Broader market distribution taking hold this week as prices pullback/correct off their early March highs. The move alleviates the short-term overbought conditions that existed from February's run-up, but it will take a few days to determine just how serious the damage is and whether buyers will return or if sellers will continue to press.
Bottom line is on Thursday we had nearly all of our Top 50 leaders closing in the "red." (Only CBOE failed to do so). When sellers start attacking the best stocks in the market from a fundamental and technical basis, it's definitely a sign to "ease off the accelerator" and consider shifting to a more "defensive" approach.
Remember, given their already strong fundamental and technical positions, our leaders should push higher or at least "behave" bullish at the appropriate technical levels on pullbacks. Caution is warranted if instead they show signs of not holding along key trendlines, support zones, and moving averages.
Also note those deleted names that didn't make the Top 50 cut for this week. In some cases, they are simply going through either a short-term "rest" or consolidation phase after a recent run-up. Don't be so quick to dismiss them, especially those that are trading back above prior week's highs, 50-day ma's.
Chart Analysis
Here's a list of those names (21) that did not notch a lower low under their prior week's low and still holding above their 20-day ma's....a sign of relative strength and worth a closer look for buying opportunities to set-up: AGN, ALK, BIIB, CBOE, CMG, DAL, LM, MD, MGA, NXPI, PANW, PNRA, PWR, QIHU, SAVE, SWKS, TRIP, UBNT, VMW, WDR, XLNX
Palo Alto Networks (PANW) - Sitting atop our Focus List, the communication equipment name consolidated last week's strong news-driven rally from the 67/70 support zone. As long as this relative strength is maintained, keep watch for another opportunity to set-up and eventually breakout over $80-resistance.
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Qihu (QIHU) - A leading Chinese Internet stock that continues to grind higher here since its late-January breakout. The multi-week uptrend along its rising 20-day ma is still intact, making pullbacks worth a closer look for a buying opportunity.
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NEXT PAGE: 3 More Stocks to Watch
|pagebreak|Red Hat, Inc. (RHT) - A classic new high/false breakout pattern that I've consistently witnessed among our leaders over the years. Remember our focus list consists of the strongest fundamental and technical stocks in our mid-large cap range and as a result they should display "bullish behavior" along basic technical levels. When price breaks out over two-month resistance, it should attract volume and follow-through higher in coming days. Failure to do so, opens the door for selling pressure, typically identified with price sliding back under resistance for more than one day. Such activity has a high probability of weighing in on price action for at least a week and in some cases, even marks a significant top. RHT has such qualities at hand, making this test of its 50-day ma and early-March low a critical support to hold.
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Biotechs (IBB) have been under pressure since late February and many leading names have moved into a corrective/consolidation phase. Note former leaders like Gilead Sciences (GILD) and Celgene (CELG) have come under heavier distribution as they breakdown to multi-month lows under their 50-day ma's. We still have a handful of biotechs among our top ranked stocks, so I wouldn't "throw in the towel" just yet, but with the IBB back near its 50-day ma's and January support zone, we could be looking at a "make or break" point for the sector.
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Ubiquiti Networks (UBNT) - A leading telecom equipment name that although very choppy as of late is maintaining some very strong relative strength here in March above its rising 20-day and 50-day ma's. There's some hesitation in the name as it extended over 54 against its upper channel resistance line, but a few days consolidation/rest could set it up for higher prices.
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Packaging Corp. of America (PKG) - A leading packaging/container stock correcting back to key gap support zone around the $70 area this week…a "must hold" support going forward and one to keep watch for upward momentum to resume back over its 20-day ma as well as the February highs along 73.
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Liquid Momentum is Briefing.com's proprietary Focus List for the 50 most liquid, high relative strength stocks in the market that are ideal for day and swing trading candidates.
By the Staff of Briefing.com
