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June 3, 2010
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Trading action over the past few days was much improved with today's action pushing us to a new two week high. What we want to know now is whether investors are ready to chase stocks higher once again or whether they are simply done selling for the time being.
If all we've done over the past month is washout sellers, then we'd like to remain hedged as the upcoming weeks will see a continuation of the recent volatility with little upward progress and the possibility of further downside. On the other hand, if investors have digested the recent market fears and priced in the negative news, we are likely to see another leg higher without much more consolidation.
We believe it's a little of both and at this point feel volatility remains too high to comfortably remove the hedge.
When volatility calms down and the market is able to make new highs without quickly giving them back we'll reconsider removing our hedge. Until we reach that point, continue adding to your stronger positions to ready yourself for the eventual next leg up. We are pleasantly surprised by the number of stocks still in favorable chart formations despite the broader market woes. For a list of the ones we remain interested in check out the "pounce" list on our current positions page: http://blog.onislandassetmgmt.com/?action=page&url=positions
Here are the "pounce" names in alphabetical order as of the close today:
AAPL
ACTG
AMMD
APKT
AZO
CBOU
CBPO
CMG
CRUS
CSTR
CTRP
CVLT
CWS
DGIT
DTPI
ECPG
GLD
HMIN
IDXX
IPXL
LMNX
MNRO
NEOG
NFLX
NTAP
OPEN
PANL
PPO
PWER
SPRD
SRLS
SXCI
THOR
VRSK
VSI