This column was originally published on RealMoney on March 23 at 1:02 p.m. EST. It's being republished as a bonus for TheStreet.com readers.On Wednesday,
The Amex Securities Broker/Dealer Index (XBD) has been in a pronounced uptrend for almost two years. I've circled the major price levels. Since late 2004, this uptrend has paused for a rest every 25 points. The index is resting right at 225 now. It pays to stay with the trend, and this trend is up. Let's look at some of the broker-dealer stocks. Goldman Sachs ( GS) continues to bounce between the middle and upper Bollinger Bands. With an uptrend this mature, I would avoid buying anywhere except on a pullback near the support line. Almost every tag of the upper Bollinger Band on the weekly chart below was followed by a pullback to the same entry price. It pays to be patient.
Lehman Brothers ( LEH) is in a very solid uptrend. The support line is a bit more ragged than the resistance line. The choppy, shallow pullbacks are the result of eager bulls with too little patience to wait for a cheaper price. Each little pause in the uptrend is bought, driving the price higher. I'd continue to watch this resistance line. When Lehman fails to tag that line on an advance, the uptrend is close to reversing.
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