The talk of the town this morning was the revision to first quarter GDP showing a decline of 2.9%. Durable goods disappointed as well, but the market was able to quickly shrug off the stale economic data and push forward. Volume was mixed on the session with NYSE seeing higher volume while the NASDAQ ended the day lower. Other big news, helping to boost media stocks was the Supreme Court ruling on the side of broadcasters over Aereo. Perhaps the higher volume on the NYSE can be attributed to the stocks like seeing a tremendous surge in volume. Nonetheless, media stocks cheered the decision. All in all we saw a nice turn around in the market today after yesterday’s nasty reversal. Remember, one day doesn’t change a trend and today proved you simply do not bail due to one bad day. The uptrend remains in place for now and until the signs of a trend reversal appear we’ll stick on the long side of the market.
This market is quite resilient given its ability to recover. A look back in April when the market sold off in heavy volume it was able to settle down and return to new highs. We can complain about the lack of upside volume, but the fact of the matter is prices continue to rise. A big mistake many have made has been trying too hard for the market turns (ie sell short heavily). There are those out there trying to top tick the market and it simply will not happen. We’ll see one or two look like geniuses when they do top tick the market, but how many times did they try? Most likely quite a bit and it is why we simply stick with the prevailing trend. Ignore the noise from market pundits by focus on price movements. Do not trade on emotion.
There are two big stocks now that GOOGL has broken out setting up for breakouts. We’ll mention one here and other will be kept to our subscribers. To become a subscriber click here. PCLN has been an institutional favorite. The current base corrected more than 20% at 21% and the handle forming now has formed above the mid-point of the base. There are areas to cheat and get in early with the proper buy near 1300. Many retail investors will shun the stock due to the price, but do not let that fool you. Due to PCLN being an institutional favorite the price of the stock does not matter (1300 vs. 13.00). Institutions can and will consume a stock of PCLN caliber at any price. Now it is a wait-and-see game as we sit patiently for PCLN to follow GOOGL’s path.
The future is unknown and it is something we have embraced and accepted. We follow a strict discipline identifying potential stocks with the characteristics to move big.
