There were 3 new highs and 106 new lows in my universe of 4,000 stocks on Wednesday. The QQQQ completed the 17th day of its short term down-trend. It would have to rise a lot more to begin a new up-trend. Still, I cannot resist buying an occasional strong stock during a counter trend rally. One stock I own a little of is AMZN, a stock championed by Judy.
AMZN had a huge gap up on January 30th when it beat earnings estimates, then consolidated for several weeks. (Looks like a head and shoulders bottom?) Today, AMZN appears to have broken out again. AMZN has a great new product in the Kindle 2 digital reader.
When I buy a stock like AMZN, I place a sell stop order immediately after the purchase goes through, at a point below recent support. In that way, if I am wrong and the stock goes down, I will be automatically sold out with a small loss. (Instead of using a stop loss order, I might buy a put for insurance) The key to success in the market is to have small losses and much larger gains.