Are Stocks Getting Too Extended?
The market has had a very nice run since bottoming in March. I still believe that stocks will be higher at year end, and that growth stocks will continue to lead.
But as I look at the charts of leading stocks, I can't help but come away with the concern that many stocks are simply too extended, and getting into overbought territory.
Whether or not this means we are due for a correction, investors should be careful about establishing new positions in stocks that are extended, as you could get whipsawed fairly quickly.
Here are some examples of some stocks I was looking at that support my thesis:
long GOOG, UTX
posted by J. Kahn @ 10:17 AM
2 comments
2 Comments:
Although I agree with your thesis. I'm not so sure about lumping GOOG in there, too. If you take a longer term look at that chart (a year or so) to see the 513 double top it cleared, it seems to be more reasonable.
FWIW, I'm long GOOG, too.
The bullish run has been slightly over extended and a correction sure seems warrented, with the Dow closing in on 14000 and all. However, there are still great growth stocks that shouldn't be ignored because the fundamentals are so strong. While Rim's sudden pop may be unsustainable, Google's rise certainly can as it is one of those solid growth plays, while Apple I believe is another. Short term hiccups not withstanding, these players are great long term holds. I discuss various investment opinions on a variety of stocks at my blog at http://wcpowertechfund.blogspot.com
Thanks for your posts here, I enjoyed reading
Regars,
Chris Krasowski
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