The Greek elections turned out "market favorable", according to various news services, yet pre-market futures are slightly lower at the moment. I want to see how the market leading stocks act once trading actually begins on Monday, and whether there will be a strong, convincing follow thru this week to the positive action that occurred last Friday.
Investors Business Daily is and always has been an excellent source for uncovering market leading stocks. But they sometimes have an interesting way of interpreting chart patterns. Take Questcor Pharmaceutical (QCOR) for example. The weekend paper on page B2 stated that QCOR jumped past a 6 week cup base.
This is brought to attention to stress the importance of looking at setups on all time frames, especially when looking for potential market leaders early on in a move after a general market corrective phase like what has occurred. If I looked at the daily chart only, it may not make my immediate scan. But the weekly chart shows a much more favorable pattern.
IBD likes to see pullbacks inside the handle area of a cup with handle pattern stay within a 15% range. In the case of QCOR, the high on May 1 was $46.84 and the intraday low on May 18 was $37.77. So that represents a 19.4% correction, and thus over the 15% limit for handles.
But QCOR has been forming a long base going back to last December, so while the market was rallying from November into Spring of this year, QCOR was forming the cup of its base. Then when the market began its correction, the stock formed the handle falling 19%. Higher growth market leaders often make moves greater than general market , so the 19% move down is reasonable when considering what the general market was doing.
So when you look at the longer term chart in the scope of the entire move and considering what the market has done during that time period, the weekly setup looks quite favorable as the stock is at new all-time highs. Remember that technical analysis is not an exact science.
Here are some stocks I'm watching to emerge if the market continues to firm up and acts constructively.
ALWAYS use stops to limit losses.
Click on charts to enlarge view:
Others of note: ATHN, ACIW, EBAY, LL, BBBY, TJX, MGAM, UA, CRUS, CERN, BWLD
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