The Gilmo Report - July 2, 2012

[Jahbulon]

Used with permission.

Fertile ground for speculation
Posted: 02 Jul 2012

Last week's key session was that of Thursday, when price put in a wash-and-rinse day to close just below the open, as shown below. This set the table for Friday's big upday.

It should be noted that this behavior was not "known" in advance. There was certainly the possibility that the Nasdaq would go down and test the June low. Despite this possibility, we operated with a bullish bias, noting in last Monday's report "Until we see more breakdowns in the leaders, Thursday's weakness will not be considered the beginning of the end of the post-June 4 move. Few glamours offer clear entry points, but this is likely to change over time should shares regain their sea legs."

But we did not "know" price would put in the Thursday reversal and move higher. This point is made because no one owns a crystal ball that foretells exactly what the market will do.

We had the bias, and that was premised upon the solid basing action of various speculative growth stock glamours.

All of this is to say that trading or speculating is about probabilities and uncertainty. How one responds and manages risk in the face of this constant uncertainty will dictate one's success.

In last week's report, the positives that were mentioned included "... 1) fairly abbreviated bases by numerous glamours, indicating some urgency by institutions to put money to work, and 2) more relative strength lines that precede price into new-high ground than any time in memory."

There are a number of aggressive growth stocks setting up in basing patterns. For a list of these, along with potentialc entry points for the speculator . . . To continue reading, please click here.