Date: Sat, 18 May 2013 22:30:00 +0200
Despite the worrisome environment, there are some rare and surprising behavior in a number of stocks. In fact, several stocks in my database are forming a very strong pattern I call a 3T BO, or Triple Top Break Out. Usually, a stock will form a cycle high with a 1,2,3 Double Top formation, and decline about 50% of its rally. Some very powerful stocks will form double tops, decline a bit, and then trade sideways. Finally, if the big buyers (hedge funds & institutions) hold and start to accumulate, then these stocks may turn up again and break resistance. While nothing is certain, this pattern can be extremely profitable as it often foretells another leg up. In my database, I have numerous stocks setting up in this pattern, including: IBM, COST, CAT, UNP, DG, DLTR, CNH & WMB. (PETM blew through a logical entry, so look for a pullback.)
This is not the ideal time to be heavily long with the EU fate unresolved, and these stocks could all blow up if the EU fails to come to a new agreement. Caution is required, and small sizes are recommended. Conversely, you can be prudent and enter later on pullbacks.
For the record, I'm long CAT & DG.