Improvement Continues – GMCR, GEOY, AKAM, CMG

The stock market continues to show strength in the face of dismal economic news. As an investor we have to follow the stock market indices and follow the trends. The stock market is a forward looking indicator by as much as 6 months. The action we see today reflects what the economy may be doing 6 months from now. Today it is clear why the stock market topped out some months back since we see a struggling economy today with mediocre GDP numbers and high unemployment still. Those earlier gains up to May probably occurred as people and the stock market saw us leaving the risk of deep recession or even depression behind. Normally we get a strong recovery from such deep slow downs but this time we are seeing a very slow recovery most likely due to the high budget deficits our government are creating. Of course as I always say we can speculate all day long but the bottom line is to follow the stock market indices.


The graph below courtesy of http://www.bigcharts.com/ indicate the Dow Jones Index came off a bottom 8 days ago and as mentioned in my previous blog we even had a follow through day. Note the higher volume accumulation days since that time. The down days with red bars are on lower volume, this is good news, let’s hope it holds. The stock market indexes are now entering an important area of resistance as indicated by the solid horizontal line, this will be a test for markets.

Mid June and early August both sold off at these levels. People who bought stock at these levels got their fingers burnt and will now start selling as stocks get back to the prices they paid. The question we need answered is that will the market be strong enough to absorb those sales or will the market tank as a result. The best solution would be for the stock market to trade sideways for a while at these levels and digest the recent gains as we absorb the expected stock sales that will occur. From that sideways action it would be great to see the market move higher on increased volume. Of course what we want means nothing and the stock market will do its own bidding. All we can do is continue adding to our positions as they climb and open up new positions if this uptrend continues. In the meantime remember to protect your initial purchases to lock in break even points or gains that you may have.

Here are a few more stocks performing well and looking ready to move higher if the stock market holds up. Make sure as always that earnings are not imminent for any new purchases. Remember this blog site is not a newsletter that promotes stock tips or penny stocks rather the idea is to teach stock selection with low risk advice.



GMCR - $34.36

GEOY – $37.96

AKAM – $49.80

CMG - $165.60