Some Healthy Pullbacks

The stock market continues to tack higher. Despite the markets moving higher today, several leading growth stocks pulled back. IBD noted this at the end of the trading session. Most pulled back on mild to low volume, which is generally constructive.


In fact, it’s more than constructive, it may offer you a buying opportunity if you missed the initial break outs.

Here are some stocks that already were or pulled back into a buy zone (within 5% of the pivot point):
BIDU
CAVM
DE
HS
JOYG
RAX
SOHU
TTMI
UA

For the record, I bought two of these, DE and RAX. DE is a slow mover but I felt its low volume dip wasn’t a sign of caution and that it would challenge $100 again soon.

On RAX, after a very strong break out, today’s pullback to its 8 EMA seemed a good opportunity to pick up a market leader at a slight discount.

I am keeping these purchases on short leashes as you’d always rather see a break out that never looks back rather than stocks that revisit buy points or come close. Nonetheless, it’s perfectly valid to buy pullbacks as many stocks will pull back slightly then take off again.

Take a look at these stocks on IBD’s website, www.investors.com, and you’ll see they are top notch stocks that just broke out of sound basing patterns. As a footnote, I bought TTMI and HS, but then sold them by the end of the day because I didn’t like their action during the break out. TTMI finished under its buy point in something of a downside reversal.

With HS, I just decided I wanted a top notch stock that is projected to actually show growth next year. HS is projected by Wall Street analysts to have zero EPS growth. Sometimes I change my mind like this. While I’m a just get in the game sort of trader, with so many stocks to choose from, it’s ok to be choosey.

Charts of DE and RAX are below. The arrow shows where the price action fell into support on their respective 8 EMA's. For Deer, it was a low volume dip (suggesting the big money wasn't selling) even though the stock finished at the bottom of the day's range. For RAX, I liked how the stock finished in the middle of the range. Generally finishing in the upper half of a stock's range shows support.