Weekly Update: Why I’d Welcome a Small Pullback
Stocks began to stall this week with somewhat choppy action in the major indexes.
This is not a surprise.
I pointed out last week that the S&P 500, represented by the SPDR S&P 500 ETF Trust (SPY) below, is right at the 200-day moving average.
This is an area where we could easily see a pullback of 5%-10%.
The 200-day moving average is a big level for both short- and long-term traders.
It is the most respected moving average, and you will often see it serve as support or resistance for both individual stocks and the major indexes.
The market has rallied hard since late July, so it is only natural to expect some profit-taking and for stocks to take a breather.
We have not seen this yet, but don’t be surprised if we get a negative week or two from here.
Too Far Too Fast?
The stochastic indicator helps to identify when the market is “overbought” or “oversold.”
A reading below 20 signals that stocks may be oversold in the short term and likely to bounce higher, while readings above 80 indicate overbought conditions.
While stocks can remain oversold in a bear market and overbought in a strong bull market, we still want to remain aware of where we are trading.
Several weeks of overbought levels are another indication that we could see a short-term decline sooner rather than later.
To be honest, I would welcome a small pullback…
This will give traders a chance to get into some of the stronger areas like solar and medical stocks that have surged past their optimal buy points in recent weeks.
And unless we see signs of heavy institutional selling, I will continue to focus on stocks to buy.
Portfolio Review
Our open position in McKesson Corporation (MCK) still looks very strong.
Per Monday’s text alert, I recommended taking partial profits and raising the stop to breakeven.
We now have a risk-free trade with a guaranteed profitable outcome.
I am watching several other stocks and plan on getting another official Stealth Trades alert out next week…
Stay tuned to your inbox for that!
Stealth Trades Watchlist
Going forward, your Weekly Updates will look a lot more like this one…
They’ll include more information on our current stock recommendations and put less of a focus on our weekly Watchlist.
Don’t worry – The full Watchlist is still available on our website right here!
But it’s important to remember that not all of the stocks on our Watchlist are actionable.
When it’s time to make an official recommendation for our Trade Tracker, I’ll let you know on our Alerts page right here!
Join the Insiders
Now, if you’ve ever wondered how I developed a proven track record of trading along the insiders like corporate CEOs, CFOs, executives and board members…
Do yourself a favor and check out my latest Insider Effect presentation!
Corporate insiders are always buying or selling shares in the companies they operate. These folks have a footing of knowledge that Main Street investors simply do not.
I covered my strategy for trading alongside corporate insiders and generating potentially massive gains as a result.
Live Coaching Session
Monday, at 3:00 p.m. EDT, we’ll be hosting our regular weekly coaching session for Stealth Trades.
We’ll send you a login reminder that morning, just so you don’t forget.
We’ll cover all of our new stocks on the Watchlist as well as the rest of the stocks inside Stealth Trades.
You need to attend this session to get the most from your subscription!
In the meantime, you can watch the replay of our latest Stealth Trades session right here.
Best wishes for your trading,
Ross Givens
Editor, Stealth Trades
P.S. Click here to learn more about my Insider Effect strategy and see what you could be missing out on.