All indices today reversed on higher volume from its lows and erased most of the losses. Technically, this would continue to show strength in the markets as buyers are stepping up to buy the lows. Continued strength of this kind cannot be ignored and bears watching. It is always prudent to not argue with the markets as trend is "your friend".
As posted yesterday, LHCG has made a nice move today and has broken through the resistance. It offers a good buying opportunity right now. The other stock that bears watching on the long side is Under Armor (UA) and Crocs (CROX).
I am being cautious about my short positions in CFC. If the market continues to rally and show strength, I will take my shorts off the table and continue to watch for a better entry point. There is no sense in taking more losses than necessary. Remember, trader's biggest asset is his capital and it is the most important part of any trader.
Having said that, CFC continues to stand up strong despite deluge of news showing that subprime markets are unraveling. The new home sales numbers were as what I expected and continues to show weakness. I do not know what the next leg's catalyst will be, but if this strength continues, I will have to rethink maintaining a position in CFC. I do believe that CFC will go down. However, I will need to watch this closely.
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