One would think that one of the most explosive market rallies of all time would trip-off all the traditional “breadth thrust” signals, or maybe even invent a few of its own. Sorry, no luck.
With almost 70% of NYSE stocks trading below their 30-week moving averages, there’s plenty to choose from for investors looking to “Play The Bounce” in YTD underperformers. The traditional “Bounce” season extends from October through January; with the MTI having just turned negative, though, we’d advise against putting this strategy to work immediately. Here are a couple of additional observations gleaned from more than 25 years of tracking this strategy:
The last screen of 2011 is presented and historical November Bounce screen results are detailed.
“Playing The Bounce” season is once again upon us. This is a tactical trading strategy designed to identify beaten-down stocks which come under heavy selling pressure at year end. When selling abates, stocks tend to “bounce.”
October brings our annual exercise in the “Playing The Bounce” strategy. This month’s “Inside The Stock Market” presents the initial run of stocks which may be subject to heavy tax loss selling. Traditionally, these stocks may be poised to “bounce” back early in the next year as selling pressure wanes.