Identify Relative Strength During Pullbacks Like These

Jordan Kimmel  |

What has changed in a month…? “There is a lot to be worried about…not a lot to be bearish about”…that is according to Stack Advisory, a well respect newsletter/money management service that I subscribe to…

Greek debt, unemployment…you name it- but until recently the market ignored the bad news and went higher anyway… We were all looking for consolidation…- be careful what you wish for. The point is people will pay different levels for stocks depending how they feel.

The tone of the market had clearly changed …we have seen 3 lower tops, A/D line had begun to struggle, and leadership is missing. What leadership there is are mostly defensive names: health care is the only growth sector among them.

If you are an investor you welcome lower prices as an opportunity. If you are a trader, you must tread more carefully. Either way look for what went down the least on the lowest volume. Weak markets allow the best stocks to stands out.

Take a look at Caterpillar (CAT). I doubt their industry has changed much over the last month, but the perception sure did!

When oil can go from 30 to 147 to 35 to 110 over a couple of years…remember how people feel matters. And as an aside, with all of the currency uncertainty gold and silver do look interesting here.

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