Nearing Exhaustion?


Editor's Note:

After six weekly gains in a row the S&P 500 index finally posted a loss. We have been concerned about the market being overbought and due for a normal, healthy correction. Now finally, thanks to a surprise announcement by the SEC slapping fraud charges on Goldman Sachs, we have a potential turning point in the market. I don't necessarily expect the market to reverse lower immediately. We will probably get a week's worth of bullish earnings news but I suspect the rally is nearing its exhaustion point.

Right now the plan is to expect the market to roll over in the second half of April and look for a entry point once the major indices have completed a 5% to 10% retracement. In the meantime we can search for potential candidates to buy on the dip. The LEAPStraders newsletter already has a dozen candidates on the watch list. I'm listing a few more candidates on my personal watch list that I'm hoping see a correction in the next few weeks. A few stocks that caught my eye: CMG, CRM, CLF, ETN, FLS, LZ, PSA, and UNP.

No new bullish positions tonight. Exercise patience and let the market come to you. When the market does pull back we'll probably see several candidates get triggered in a very short time frame. Decide now which ones appeal the most to you.