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Byline: JONAH KERI
The stock market's abrupt five-day sell-off Sept. 24-30 whacked dozens of leading stocks, raising fears of a sizeable correction. The carnage never came though, as the Nasdaq bounced off its 50-day moving average, and stocks resumed their strong ascent.
But a change did occur. After running up two-, threefold or more, several of the leading stocks over the last six months finally buckled. Some fell to their 50-day moving averages, then found support. Others kept on falling.
The result was a rotation by institutional investors from extended highfliers to a new batch of stocks just starting to break out of bases.
Stick to a sound set of trading rules, and you should be able to navigate the changing landscape.
The first step is watching the market daily, as well as following the daily price and volume action of leading stocks.
If you already own stocks, watch them every day. A few new highs on light volume, heavy volume with little price movement or down days in brisk trade should raise red flags and prompt you to take a closer look at your holdings.