The market put in a fairly weak five days, but in looking at the chart below, it was pretty much expected. My concern, however, is that when a stock or index forms an ascending triangle, the next big move is usually to the downside. It’s not a lock of course, but I’d be careful about accumulating much on the long side.
I don’t mind buying on dips, but you can also buy on breakouts. The strategy is to wait for a stock to take out resistance before buying. You now have some momentum behind you and a logical spot to put your stop: right below the resistance that was just broken. Waste Management (WM) is a great example.
Of course, dip buying also has some advantages and there I like to buy where there’s clear support. Hershey (HSY) is teed up for a purchase right now.
Back next week to see just how that triangle plays out.
Gary B. Smith joined FOX News Channel in 1999 and is currently a regular commentator on "Bulls & Bears," including his own segment called, "The Chartman."