After Friday’s Follow Through Day, this weekend’s analysis has become significantly more important. This week, I heard both Tim Reazor and Scott O’Neil from IBD say that you need to buy something from your watch list the day after a Follow Through Day. They suggest taking a small position and then pyramid in or get out based on how the markets behave. With that said, let’s look through the IBD Leaderboard.
CSTR is the stock that appears to be head and shoulders above all the rest. It broke out of a very nice Cup with Handle base Wednesday on light volume, then pulled back a bit Thursday. Yesterday, it blew back through the Pivot Point on 41% increased volume. CSTR is in the 17th ranked industry group and its RS line is at a new high. It broke out of a first stage base and has an almost perfect Stock Checkup.
The rest of the stocks that are around their Pivot Points all have significant weaknesses. ALGN is in the 44th ranked Industry Group (Yellow Light) and broke through its Pivot on below average volume Friday. DNKN is probably the second strongest stock, but its RS line has fallen the past few days. MLNX is in the 39th ranked Industry Group (Yellow Light) and is at the very top of its Buying Range. SXCI still has not passed its Pivot on above average volume. TCBI looked very strong until its Negative Reversal yesterday. TDG broke out yesterday on light volume and is in the 103rd ranked Industry Group (Red Light). I dealt with the same problems in this group when I owned BEAV earlier this year.
The other three Leaderboard stocks, KORS, FIRE, and SWI are all still in the base building stage. They each have potential, but still require a lot of work.
As far as I can see, CSTR has more positives in its favor than any other stock and it also has less negatives. Based on that, I believe it is the most likely to go up and the least likely to go down. This doesn’t mean that it is a sure thing, but it certainly will help stack the odds in my favor.