Fitz Bits: Blind Loyalty Is Not a Strategy

OK, let's look at some charts. Michael Kors (KORS) Owens-Illinois (OI) Intuitive Surgical (ISRG) Netflix (NFLX) Last Friday wasn't kind to the bulls. Using a very tepid March unemployment report as an excuse, traders took profits and started raising cash. If you're trading this market as if it were the same as it was in late 2013, you're a bit behind in adapting your strategy. The S&P 500 is in a fairly narrow trading range, but many stocks are still quite volatile. The highfliers have flown and are now coming down to earth. Those really aren't where you want to be anymore. Some would say that it's always a stock-picker's market. Now, however, that's really true. So, rather than letting blind loyalty be your trading strategy, focus on what's working. If it's not working, then why own it? Check out these four stocks that just may be actionable this week. Since its initial public offering in December 2011, Michael Kors has been on a tear. After the stock gapped up to around $90 on a very strong earnings report, it continued to run until resistance at $100. Since that time, it's been falling along with many other retail stocks. Now shares are starting to close below the 50-day moving average, which hasn't been happening too often. However, Michael Kors is now right back at the top of the gap -- $89. If you're long this name, you should be right on the precipice of selling. Any fall below current support is likely to close the gap. This is just about $9 lower than current levels. If you want to hold through that pullback, it's fine. The uptrend is still intact. However, as a trader, you'll probably want to get out of the stock and wait to buy at new support. This daily chart of Owens-Illinois shows narrowing consolidation since breaking trend in mid-January, when the stock fell decisively below the 50-day moving average. I've drawn a line connecting the last two lows. Now, it takes three points to make a trendline, so we're still waiting for confirmation of support. Last week Owens-Illinois broke above resistance on about average volume. It pulled back just slightly last Friday, revealing a lot more strength than many other stocks. Still, I'd wait for a pullback to somewhere between support and resistance. If the stock then shows signs of buying pressure -- which you'll see if the closes are higher than the opens -- then this is a pullback that you'll want to buy. Intuitive Surgical is always a wild ride for those who love excitement. Last week the stock gapped up and kept going for three days. The pullback on Friday was predictable -- only the timing was unknown. But when a parabolic move gives way to a reversal, you can be pretty confident that a major high has been formed. I think this is a viable short right now -- as long as you keep a buy-stop above Thursday's high. If Intuitive Surgical moves to a new high, it will mean that irrational exuberance is reaching new heights, and you won't want to stand in the way. Netflix had been a highflier until early March. After peaking at $450, the stock has been pulling back, and the 50-day moving average didn't scare the bears at all. Now the stock is back to test the January low, which also coincides with the 200-day moving average. If Netflix is going to bounce, this is the time it will happen. Rather than just stepping in, why not wait for evidence that buyers are indeed coming for the stock? Any close that's higher than the open would be a reasonable sign that the stock has hit bottom. But even if Netflix bounces, the momentum -- much like Elvis -- will have left the building. You're now trading an oversold bounce on a broken stock. If you've got any stocks that you'd like reviewed, you can email me here. Be careful out there.

Fitz Bits: Blind Loyalty Is Not a Strategy

Instead, focus on what's working -- like, perhaps, these four potentially actionable names.

Columnist Conversation

Think Twice Before Selling Stocks Now

Are You a Seller or a Buyer Friday?

Toughest Trade on Thursday

COLUMNIST TWEETS

Please Join or Log In to manage and receive alerts.