The major market averages rose minimally on higher volume as they exhibited a bit of churning action, though true churning occurs on days which have significantly higher volume than the 50-day average volume. S&P 500 profit growth for the first quarter is running at a relatively slow 4.9% rate, suggesting the economic recovery remains tepid at best and lending credence to the idea that QE and the massive liquidity it has injected into the markets that continues to drive the rally.
Acadia Pharmaceuticals (ACAD) broke out of a nice flag formation Monday on strong volume. The pullback on Tuesday on lower volume comes as no surprise, thus the stock is still actionable.That said, the biotech stock is still losing money and has nearly non-existent sales. However, it does have a significant drug in its pipeline that offers the only treatment for Parkinson's related dementia, and the stock did have three powerful gap ups over the last six months. Industry group is ranked 6th. Given that it is a biotech with no earnings, risk is higher here so position size accordingly.
While the tight uptrend in the major averages continues to new heights, always keep a close eye on your stops as risk management is rule number one. Given the extended state of most leading stocks, a pullback or period of digestion is not out of the question, and would likely be necessary if the rally is to continue over the intermediate term.
This information is provided by MoKa Investors, LLC DBA Virtue of Selfish Investing (VoSI) is issued solely for informational purposes and does not constitute an offer to sell or a solicitation of an offer to buy securities. Information contained herein is based on sources which we believe to be reliable but is not guaranteed by us as being accurate and does not purport to be a complete statement or summary of available data. VoSI reports are intended to alert VoSI members to technical developments in certain securities that may or may not be actionable, only, and are not intended as recommendations. Past performance is not a guarantee, nor is it necessarily indicative, of future results. Opinions expressed herein are statements of our judgment as of the publication date and are subject to change without notice. Entities including but not limited to VoSI, its members, officers, directors, employees, customers, agents, and affiliates may have a position, long or short, in the securities referred to herein, and/or other related securities, and may increase or decrease such position or take a contra position. Additional information is available upon written request. This publication is for clients of Virtue of Selfish Investing. Reproduction without written permission is strictly prohibited and will be prosecuted to the full extent of the law. ©2020 MoKa Investors, LLC DBA Virtue of Selfish Investing. All rights reserved.