This Day On The Street
Continue to site right-arrow
ADVERTISEMENT
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here
TheStreet Open House

Here's why I'm turning cautious on stocks this summer

By Jesse Barkasy

Many stocks especially in the growth sector have had very big selloffs and corrections in recent weeks. Some of the hardest hit were the following stocks: Coupons.com (COUP), Rocket Fuel (FUEL), FireEye (FEYE), Pandora (P), RetailMeNot (SALE) and ZuLily (ZU).

I am now waiting to see if the sell off spreads to more stocks and starts to weigh down the general market averages. I have no way of knowing this for sure, but one possible scenario is that big financial institutions step in and start buying. That in turn may create new sector leaders and perhaps ignited a new rally. The recent rally was on light volume, so I am very cautious with any trade.

Kulicke & Soffa (KLIC), Lam Research (LRCX), Micron Technology (MU) and SanDisk (SNDK) are all related to semiconductor manufacturing and these stocks have held strong while many tech stocks have been falling hard.

Pandora is a stock I am very interested in. So many in the media are talking Pandora down, while sales keep coming and listeners keep growing. In the company's latest quarterly results, sales for Pandora were $194 million vs. $115 million in the previous year. I don't have a crystal ball, but I expect some institutional buyers to snap up Pandora shares soon.

In the solar space, I am interested in Canadian Solar (CSIQ), SunPower (SPWR), First Solar (FSLR), SunEdison (SUNE), and SolarCity (SCTY).

In the auto sector I am looking at General Motors (GM) and Tata Motors (TTM).

As for Chinese ADRs, I am studying Weibo (WB), Leju Holdings (LEJU), 58.com (WUBA), Ctrip.com (CTRP) and BitAuto Holdings (BITA).

Right now, it looks as if the selloff is not done and my strategy is to look for reversals as well as breakouts on high volume.

As I write this U.S. Treasury Bonds are on an uptrend signaling to me a weaker economy and potentially some more trouble for U.S. stocks. As always I am ready for any trend to reverse. However, until bonds turn down I am becoming more bearish on stocks.

I am expecting a downtrend to spread and some sort of capitulation to happen. Volume is my key to see where and when institutions get really excited about a stock.

Some nice strong volume up days in the averages are needed. And with the Federal Reserve tapering as well as the summer trading season arriving, I may be testing and waiting for some time.

1 of 2

Select the service that is right for you!

COMPARE ALL SERVICES
Action Alerts PLUS
Try it NOW

Jim Cramer and Stephanie Link actively manage a real portfolio and reveal their money management tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
  • Weekly roundups
TheStreet Quant Ratings
Try it NOW
Only $49.95/yr

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
  • Upgrade/downgrade alerts
Stocks Under $10
Try it NOW

David Peltier, uncovers low dollar stocks with extraordinary upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
  • Weekly roundups
Dividend Stock Advisor
Try it NOW

Jim Cramer's protege, David Peltier, identifies the best of breed dividend stocks that will pay a reliable AND significant income stream.

Product Features:
  • Diversified model portfolio of dividend stocks
  • Alerts when market news affect the portfolio
  • Bi-weekly updates with exact steps to take - BUY, HOLD, SELL
Real Money Pro
Try it NOW

All of Real Money, plus 15 more of Wall Street's sharpest minds delivering actionable trading ideas, a comprehensive look at the market, and fundamental and technical analysis.

Product Features:
  • Real Money + Doug Kass Plus 15 more Wall Street Pros
  • Intraday commentary & news
  • Ultra-actionable trading ideas
Options Profits
Try it NOW

Our options trading pros provide daily market commentary and over 100 monthly option trading ideas and strategies to help you become a well-seasoned trader.

Product Features:
  • 100+ monthly options trading ideas
  • Actionable options commentary & news
  • Real-time trading community
  • Options TV
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!
DOW 16,779.53 +101.63 0.61%
S&P 500 1,961.69 +10.87 0.56%
NASDAQ 4,472.8650 +20.0730 0.45%

Brokerage Partners

Rates from Bankrate.com

  • Mortgage
  • Credit Cards
  • Auto

Free Newsletters from TheStreet

My Subscriptions:

After the Bell

Before the Bell

Booyah! Newsletter

Midday Bell

TheStreet Top 10 Stories

Winners & Losers

Register for Newsletters
Top Rated Stocks Top Rated Funds Top Rated ETFs