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  1. Home
  2. / Investing

Selling Into Strength Can Be a Great Strategic Move

We are seeing lower lows in the indices as I write.
By JAMES "REV SHARK" DEPORRE
Sep 28, 2016 | 11:15 AM EDT
Stocks quotes in this article: SRPT, TPIC, CTRL, YRD, ETSY, ERII, GBT

The indices are chopping around and doing nothing while breadth started off quite strong at better than 2 to 1 positive and is now fading. We have 162 stocks making new 12-month highs, which is helpful for stock pickers but it's sloppy action, with momentum stalling out quickly in a number of cases.

Several stocks I've discussed recently including Sarepta (SRPT) , TPI Composites (TPIC) , Contol4 (CTRL) and Yirendai (YRD) are strong in the early going, but I'm concerned that they can build further momentum. I've reduced a number of positions and cleared out some smaller names like Etsy (ETSY) .

I often discuss how price action should be your ultimate guide and sometimes that means looking at subtler clues rather than just obvious breakouts and breakdowns. Selling into strength can be a great strategic move when the market starts to exhibit signs that momentum is stalling.

We are seeing lower lows in the indices as I write, and selling in some recent favorites like Energy Recovery ( ERII) and Global Blood ( GBT) is picking up. I'll be looking for new entries, but I'm being a bit more defensive and protecting gains this morning.
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At the time of publication, Rev Shark was long SRPT, TPIC, ERII, GBT, although positions may change at any time.

TAGS: Investing | U.S. Equity | Markets | How-to | Risk Management | Stocks

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