MLR - Price/volume is key
We sent out a report on a stock earlier today as it had a buyable gap up because a drug in its pipeline received FDA approval before the market open. Type in keyword 'gap' into the keyword search bar here http://www.virtueofselfishinvesting.com/faqs if you are not fully familiar with the buyable gap up strategy.
That said, this brings to light what is important when it comes to actionable stocks. When gearing up to buy a stock, once the fundamental story and fundamental variables show leading characteristics, then the technical action must be sound. It is not the news item itself that is important but the price/volume action that results from the news item.
In a similar vein, we reported on MLNX as being actionable on the long side a number of times as it had a number of pocket pivots. For those who used our 7-week rule (see FAQs for further information), they are still sitting in the position since MLNX violated its 10-day moving average on June 22, 2012, thus one would use a violation of the 50-day moving average as their sell stop. A violation occurs when the stock closes below the low of its moving average then moves below the low of that close. Thus, price/volume action using the 7-week rule, once again, has kept one in position. Note, all stocks under consideration must display leading fundamental and technical characteristics before we will consider them actionable.
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