Market is in confirmed uptrend, but the days of high volume selling is high and steady at 6. (once it reaches 6-8, the market has hit the top for now)
Market sentiment indicators are also approaching great bullish optimism
The Delta MSI (DMSI)measures the position of ~3,600 stocks relative to an intermediate-term moving average crossover (MAC) point. When greater than 50% of the stocks followed are above this MAC point, the market is bullish and equities are attractive. When the indicator is below 50%, risk is elevated and stock exposures should be reduced
Current Sentiment Last Week 2 Weeks Ago 3 Weeks Ago
BULLISH 61.6% 67.0% 73.9%
Investor’s Intelligence sentiment indicator has backed off
Also AAII sentiment indicator fell 6 points from an all time high.
Now lets look at Fleetcor (FLT)
Key characteristics : Number 7 on the top 50 stocks of the entire market. 99 Composite Rating (top 1% of all stocks), EPS rating of 97, Relative Strength Line rating of 93, accumulation by market (people are buying it) is C+ which is not good (but the volume has quieted down a bit), since it hit the double top of 120 USD. Out of 197 industry groups (we want to invest only in the top 40 industry groups in the entire market and in the top 6 broad sectors out of 33 sectors based on price performance). FLT belongs the industry group of finance-credit card/payment processing, this industry group is ranked at number 14. FLT is the sector leader in finance (sector leaders are the greatest performers often having 1-2 years of heavy stock price growth). Finance is the currently in the top 6 sectors with the rank of #6 out of 33 sectors.
We need to invest in the best of the sectors (top 6 of 33 Sectors), and within that the best of the industry groups (top 40 of the 197 industry groups), and the top 50 stocks of the entire market or sector leaders. We want to invest when the market is in uptrend, and when the best of the best stocks are breaking out of bases or bouncing off their 50 day moving averages in high volume. Simple isn’t it?
Always, always, without fail cut your losses (5%-8% of your purchase price : Remember it is easier to make up for the loss with a gain of 100% or more for winners, and it is easy. Preserve your capital at all costs, so when those winning stocks come along the way you are ready to play. Opportunities are like train stations in Tokyo, one goes and the other comes. Have the cash to buy the ticket and be on the platform and ride any train that you are comfortable with. Let the chart speak to you: trade what you see and not what you think)
Look at the chart – it is forming a second base recently.
I will buy one call option if it crosses 120 in high volume (only if the market is in uptrend).
I will write a post later on call options.