Extended Market Makes Finding Entry Points Tough

 | Oct 02, 2017 | 10:52 AM EDT
  • Comment
  • Print Print
  • Print
Stock quotes in this article:

jp

,

nvmi

,

uctt

,

zgnx

This morning's continued strength is surprising enough given how extended things have become recently, but it is even more surprising when it occurs when there is such dramatically ugly news in the headlines. The forces that drive the buying are completely unconcerned about anything other than the price action.

Breadth is running about 4,000 gainers to 2,500 decliners and new highs are piling up again. The chip sector is particularly hot and biotechnology has some very aggressive momentum-chasing taking place. The FANG names are not performing particularly well, but that is outweighed by financials.

The dilemma of this market is that it now is extended enough that it's difficult to make new entries, but the amazing strength should scare away bears who are looking for a reversal. There is just no logical way to gauge how much further this market can run even when it is technically extended by most measures.

Some of my recent buys continue to run up nicely and I am trying to resist the urge to keep selling down into the strength. Jupai Holdings Ltd. (JP) , Nova Measuring Instruments Ltd. (NVMI) , Ultra Clean Holdings Inc. (UCTT) and Zogenix Inc. (ZGNX) are a few examples.

The hardest thing in trading often is staying with the momentum. It is our natural inclination to argue with strength that seems unreasonable. The concept of "reasonableness" can be a major handicap in this market.

I find that in a market that is moving like this I become less long as I'm unable to add new buys. I don't try to time tops, but it happens by default when I manage individual positions.

Columnist Conversations

View Chart »  View in New Window » BA chart I'm STALKING this one for a buy trigger........
View Chart »  View in New Window »   WEEKLY
BABA is still dancing on key weekly support here.  Wait for a trigger! View Chart »  Vi...
BABA is still dancing on key weekly support here.  Wait for a trigger! View Chart »  Vi...

BEST IDEAS

REAL MONEY'S BEST IDEAS

News Breaks

Powered by

COLUMNIST TWEETS

Except as otherwise indicated, quotes are delayed. Quotes delayed at least 20 minutes for all exchanges. Market Data & Company fundamental data provided by FactSet. Earnings and ratings provided by Zacks. Mutual fund data provided by Valueline. ETF data provided by Lipper. Powered and implemented by FactSet Digital Solutions Group.


TheStreet Ratings updates stock ratings daily. However, if no rating change occurs, the data on this page does not update. The data does update after 90 days if no rating change occurs within that time period.

FactSet calculates the Market Cap for the basic symbol to include common shares only. Year-to-date mutual fund returns are calculated on a monthly basis by Value Line and posted mid-month.