Break Above 50 MA – AIPC, GMCR, JDAS

My last two blogs have spoke about the indexes Dow, Nasdaq and S&P all flirting and indeed testing the 50 day moving average. The indexes now appear to be breaking through the 50 day MA to the upside. In particular the Nasdaq is breaking through to the upside on increasing volume. See the chart below courtesy of http://www.bicharts.com/

You can see the Nasdaq stalled at the moving average then tightened up only to break out again to the upside on increasing volume. This suggests that the bulls have beaten down the bears as they run into hiding (at least for the moment). Remember the stock market is an art not a science and there are no hard and fast rules on how to identify an up market, otherwise we would all be rich. However as I have mentioned before we do now have an ‘odds favor’ situation. This means the market is more likely to increase near term than decrease, I emphasis again no sure thing.

This is why we have to be great at money management. If you don’t know what I am talking about read my old blogs. The idea is we buy a little and wait for it to become profitable before buying additional equity in that stock as well as starting new positions. Doing it this way leaves very little money at risk if the market turns back down, then you add, add, and add again as long as the market keeps going up. If the market turns down after you own individual positions then you stop buying now positions and just add or deduct from the position you currently own as they move up or down.

Below I wish to mention a few stocks that have recently jumped up on very high volume and are now consolidating. A small pilot purchase can be made in these stocks as they become more quiet with your 10% (or better) stop in place or if you are close to the market you can buy as you see them move up from the quiet area. Make sure they are not about to release earnings otherwise wait until after.

AIPC - $39.33

GMCR - $87.90

JDAS - $28.86