Time To Buy That Dip With ECTE
The market continued lower yesterday as resistance levels across the board held. Volume was once again lower as market participates try to decide which direction the indices want to push. Curiously financials have lagged over the past three sessions.
I expected the market to be down yesterday, but not a substantial amount. Although I still prefer the indices fall further, there is a great possibility the market rallies this week and sets up for a break out in the first week in April. Remember this chart from our weekend video series. But first SPX needs to take out 1301.
Even though 1301 resistance is still in place, I wanted to begin adding more positions. I think a good approach is to buy stocks with 25% upside and limit downside to 5%, as long as you are doing this with some degree of success, you can have 4 losers for every winner and break-even or better.
Four positions were added to the TradeMaster portfolio. One of which is ECTE. Shares are in a flag, that if broken targets over $6. The stock has not broken out yet, but volume has increased shortly after our entry and most technical indicators show a break out is possible. Stops can be set for $3.20, which is less than a 10% loss for a 82% pop.
The indices abroad declined modestly last night, with the Nikkei losing momentum. I mentioned yesterday Japan Recovers the big test will come at 9600, and sure enough the index hit that price and declined 1.45%.
The Nikkei setup still looks fine. After the index dropped down to 8227 last week, it quickly recovered the next day, and formed a bullish harami, to close at 9200. The harami candle is a candle that resides entirely within the previous day candle. The candle signals that the preexisting trend ran out of steam and that a reversal in price is near. And Honda (NYSE: HMC) and Toyota (NYSE: TM) look to be in nice long term setups. HMC should find resistance at $40.75 while TM should see selling pick up at $87. In both stocks, last week's lows should provide ample support over the next few months.
Yields on Irish bonds are soaring. And that has applied downward pressure to the euro. Additionally, Egypt's exchange opened today. It was the first time the exchange has opened since January.
Unfortunately, the index was down nearly 10%. That decline is a constant reminder of the troubles that continue to face North Africa and the Middle East. Japan's quake took a lot of attention away from that region, but tensions still run high with oil above $100 as proof.
Watch List
The TradeMaster Daily Stock Alerts watch list is bullish again - and this time it's on commodities and technology. For a full list of our trades and video of our current stock watch list CLICK.
