us stock market, trend trading stock

- Lower close Friday but only after a solid week and a strong month.
- PCE remains stubborn even as consumer spending gains slow, but Fed shows an open mind.
- Chicago PMI posts a solid September result, setting the stage for the national number on Monday.
- Truckers keep on trucking, just not as much.
- No rest for the market as window dressing money is redeployed and new money put to work.

Here's a trade from "The Daily" and insights into our trading strategy:

Chart by StockCharts.com

Company Profile
We always look to play market leaders with strong fundamentals growth because they attract most of the money, and that tends to keep them moving higher and higher. As they move higher they continue to give us opportunities to move into them as the test or consolidate good moves. AKAM has given us many entry points over the past year, and the most recent one was in early September after it consolidated laterally in a narrow range following a late August gap higher.

We monitored it as it moved laterally in the pattern, and on 9-7 it showed a doji on support at the 18 day EMA. The next session it started higher off of that test and candlestick doji. We put it on the report 9-8, and on the following Monday AKAM was off again, moving on higher volume. We entered the play with stock at $41.72 and some January $40 call options at $5.80. That move with the volume flooding back in kicked off another classic AKAM rally. It held a 45 degree trend up the 10 day EMA over the next two weeks. It would rally in big surges, then fade back to test the 10 day EMA on lower trade. Then last week volume surged again as it made another run. After a strong week we had some solid gain built into our positions, and Friday when we saw it run higher but then start to peak out we decided with the quarter end it was a good time to lock in some profits. We sold part of our stock position at $50.78, a solid 21.7% gain. We sold some of our January calls for $13, banking 124% on those less some commissions.

It may seem trite, but if you have a strong leader with good fundamentals and technical position, isn't it better to focus on that stock as opposed to trying to pick a downtrodden stock that is 'due' for a rebound or is a supposed 'value' due to its low price. It may be a value, but we would rather the market tell us what it thinks is a value because the market is the final arbiter of value. If no one wants a stock is it a value just because it is cheap? Don't think so. Stick with stocks that are showing leadership combined with solid fundamentals growth rates and that are offering a good entry position. When they move, you move in, take what it will give, and then look for more opportunity with that leader after it rests.

Learn more about "The Daily" with Stock Picks! - Issued 5 Times Per Week

Playing stock splits can be very profitable, but it takes know-how. Our stock split service focuses on three main types of plays:

1) pre-announcement (where we forecast an upcoming split prior to the company making the announcement); 2) pre-split (these plays are made in the days leading up to the actual split day); and 3) post-split plays (plays made after the actual stock split where the stock is showing continued or renewed strength).

For post-splits, we can play them as we would pre-splits (very short term), but we prefer to stretch our horizons, playing the trend. When playing options, we look further out, 2 or more months at least. We let the trend carry us along if there is one, but we will also take profits if the technical pattern degenerates, e.g., breaks a trendline. The main difference between post-splits and pre-splits plays is that we really have to like the pattern. Pre-splits can run right before their splits even with poor technical indicators. For post-splits, we are looking at the stocks from more of a longer term "would I buy this stock at this juncture?" position. Now there are times when a hot stock splits and investors pile in to get in while the stock is 'cheaper.' We play those, but with more of a short-term, pre-splits mentality in that we will be ready to get out fast if the momentum fades.

Remember, everything we do has to pass muster with the market that day ... don't fight the market on these plays.

Here's a post-split play and our current analysis.

Chart by StockCharts.com

Company Profile
STATUS: Cup w/handle. Strong break higher Friday by both price and volume as MCO started the breakout from its 6 month pattern. Very steady, well-formed base is a picture of accumulation. Speaking of accumulation, it is an outstanding 9 to 3 (9 up price weeks on rising volume to 3 down price weeks on rising volume). Sweet pattern, strong Friday move. Looking to take positions as it continues higher and then on a successful breakout test. Very nice. Has a tendency to be a bit moody, but the one it is showing now is a good one.
Volume: 2.202M Avg Volume: 1.329M
BUY POINT: $65.88 Volume=1.4M Target=$75.85 Stop=$63.44
POSITION: MCO AM - Jan. $65c (61 delta) &/or Stock

Learn more about our Stock Split Report and how we have made gains of 321% with our powerful stock split plays!
Details Here.