Look at the huge volume spike after the November elections followed by anemic volume ever since. In fact, as the Dow Jones Industrial Average has been rising, the volume has been falling lower. From a technical perspective, that is ominous, especially this time of year. Now take a look at the Relative Strength Indicator, which appears to be in the overbought area and appears to be breaking down. The widely used RSI is a momentum oscillator that compares the strength of gains against the strength of losses over a given period. RSI always ranges between 0 and 100. Values below 30 and above 70 are typically taken as oversold and overbought, respectively. A strengthening RSI indicates that gains are tending to dominate losses. Once the RSI climbs above 70, however, the sustainability of the gains is called into question. With the Fed's quarterly meeting and press conference tomorrow (12:15 p.m. EST, Dec. 12) and the lackluster volume Tuesday, I smell a correction in the wind. Perhaps that's one of the reasons why the deep-discount retailers like Dollar General ( DG) and Family Dollar ( FDO) fell so much on Tuesday on spectacular volume. Are they the "canaries in the coal mine"? With the present downside market risk, if you're looking to make a stock purchase, you might want to consider companies where the insiders are piling into shares in an unusually optimistic manner. One such company is Bruker. This innovative company designs, manufactures, services and sells proprietary life science and materials research systems worldwide. Tuesday shares jumped 2% on almost 50% higher-than-normal volume. One reason is that investors are learning that the CEO Dr. Frank Laukien and two of his relatives who are company directors own a combined total of almost 73,161,000 shares of BRKR.
Considering that Bruker is one of the worlds' leading manufacturers of analytical X-ray systems, atomic force microscopy, optical emission spectrometers and combustion analyzers for materials research, it is no wonder that sales increased by $1.7 billion during the last 12 months. Its subsidiary Bruker BioSpin is the global leader in analytical magnetic resonance instruments. A division called "Bruker Daltonics" is a leading manufacturer of mass spectrometry instruments for biochemical and pharmaceutical research. I'd encourage you to visit its colorful and user-friendly Web site and see all the revolutionary ways it is assuming leadership in its fields of expertise. When it comes to buying shares, investors may want to wait for the next pull back to the $14 level or lower, so that you'll be buying near the same levels at which the insiders have been buying. After tomorrow's big policy announcements by the Federal Reserve and Chairman Bernanke's press conference, you might just have such an opportunity. As I've been reminding our readers regularly, I'd encourage you to utilize a trailing stop loss and alert system that falls below the "radar screens" of the stock exchange market makers. One such system called "TradeStops" is an intuitive product that will let you know when a trailing stop loss has been hit without having to place a stop-limit or stop-loss order that may attract unwanted "bottom feeders." I use it and have found it very effective and helpful.