Pause for Thought – CISG AMLN PEGA HELE

The market has indeed performed well in the face of a poor economy and high unemployment. Last March things looked bleak yet the market bottomed and has moved up ever since. This is why the reader needs to follow price and volume and not look at the news. All news is already built into the price of stocks. In any case the market is a forecasting tool of things to come so arguably it could be said that the recent 12 month climb was a forecast of an improving economy. Clearly the economy is weak and it could still stall however things have improved in the last 12 months.


My last update spoke about the market being extended and the fact that indexes can stay extended. Currently the indexes are hesitating so we need to carefully consider new purchases. Friday most indexes were down on quite heavy volume. See the graph below courtesy of http://www.bigcharts.com/

Notice the circled high volume spike which is apparent on most indexes. This suggests you should treat the market with some caution and watch for more high volume selling spikes which may or may not occur going forward. I have to stress however that any pullbacks are healthy at this juncture since the indexes are too far above their 50 day moving average. The reader should still be in buying mode as long as the indexes stay above the 50 day moving average. When indexes fall below the average on volume is the time to think differently.

I remain in buy mode and any pull backs should be viewed as another buying opportunity unless things change. The following stocks are all pulling back into their quiet zone as volume diminishes. As the indexes pull back the following stocks can be considered with a very small pilot purchase. Any falls on high volume in these stocks and they should be removed from your watch list. Be sure not to buy just before earnings are announced.

CISG - $25.28

AMLN - $22.49

PEGA - $37.77

HELE - $26.02