Nothing More Beautiful than the Blue Sky

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When you hear people scanning for new highs, for many this is a crazy strategy, for others it is just the game they are looking for.  Kind of like Skydiving.  Many think it is dumb to jump out of a perfectly sound plane, while others embrace and enjoy the adventure.  We all have different personalities, so it makes sense our trading styles, just like our hobbies, should be different as well.  The more comfortable you are with your environment, the better decision you are likely to make.

Buying stocks making new 52 week highs is a relative strength strategy that has been working for decades and will likely continue.  Those who trade them monitor them every day looking for new opportunities.  Rarely does the scan come up empty.  On occasion, you will not only be looking at a 52 week high, but also be staring in the face of an All Time High!  These should be given special attention (and scrutiny) when you see them on a chart.  In my charts, I denote these as being in Blue Sky Territory and they will almost always be on the list.

Most will tell you they love the blue sky, but far fewer will go out and harness it for their personal use.  Fear is often the reason, but I believe Blue Sky Territory is a buyer’s dream. Why?  Because there is not resistance overhead to cause any friction on the way up.  No resistance.  No underwater supply waiting to come back to market as soon as they get even.  It is uncharted and uncrowded territory, so price can (and often will) move smoothly like it is gliding through the sky.  Today, one example of this was $PSX, a recent spin-off that has performed well after an initial dip now continuing higher into Blue Sky Territory.

Today’s action breaks the bull flag moving into new all time highs once again.

Only time will tell if it continues to climb, but it is certainly worth paying attention to.  So, it is up to you.  Are you the type who will go out on a Blue Sky day and fly a kite or maybe just gaze into it and dream…Or will you be one that will harness it?

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(All market data above are derived from Stockcharts.com, Esignal, and Reutersdatalink)

The information set forth herein was obtained from sources which we believe to be reliable, but we do not guarantee its accuracy.  Neither the information, nor any opinion expressed constitutes a solicitation by us of the purchase or sale of any securities or commodities.  I or my affiliates may hold positions or other interests in securities mentioned in the blog.  Full Disclaimer
There is no guarantee that the views expressed in this communication will become reality. Investing in the stock market involves risk and potential loss of principal.  Investment strategies should be thoroughly researched and understood before implementing and none of this should be construed as a recommendation.