The "Bouncing Sector"

Hey Gang:

First, I'd like to thank Garvie and David Chambers for a GREAT lunch at Elizabeth's Pizza in Quaker Village last week. We had a very nice get-together to talk about a variety of investing subjects. I appreciate their confidence and curiosity in what I had to say, and I hope their lunch money was well spent. My wife, Sylvia thanks you too for her lunch. Finally, I will not be able to attend tonight's meeting because I have a more important engagement, birthing class with my wife. We are expecting our first child late May, so these classes are important. I should be able to attend the next meeting in April, and of course in the meantime, I'll continue the blog.

Y'all know I am a BIG fan of "bouncing" stocks. You know, uptrending stocks in established channels where I can buy on the bounce, and sell Covered Calls at Channel Resistance. Well, I MAY have found the motherload. Utilities.

I was looking at various components of Sector ETFs and noticed that Utility stocks have a very strong propensity to Channel and Bounce. Here are some examples:

AEP

CMS

CNP
ED
PPLThe charts are pretty self-explanatory. I have these on my watch list, so when the return to their support levels, I'll be entering a couple.

Overall, the market is pretty overbought IMHO (In My Humble Opinion), and the bad housing data (surprise!) didn't help with any Bullish sentiment. Here is th $INDU:

The MACD and STO indicate the recent run-up may be over for now, and we can expect a fall-back, probably to $12,300. If it drops below that, then it may come back to the top of the Major Ascending Channel (in Blue).

Here is the $COMPQ (NASDAQ Composite) 2-Year

Again, the market looks overbought and I expect a retracement to the targets I have highlighted in RED.

I hope y'all have a good meeting and I look forward to seeing you next time.

Happy Trading!