Monday, December 10, 2007

Bitter Sweet Caramel Kvetch

The portfolio surged again today and I took the occasion to reduce further; selling the strength in these names ahead of tomorrow's FOMC meeting. The money has been easy and while it might remain easy right through to the year end, I don't feel like pushing much between now and about the 17th.

If we see a pullback following the Fed, I'll be considering entry points to re-accumulate, but otherwise I would wait for the 17th or so to get aggressive again; we'll see. In any event, I seriously doubt I'll be going short.

I traded out of all of the CSIQ today (23.24 ave.). This is the strongest name I know at the moment which trades more than 1.5M shrs/day; I will be looking to re-enter this when it makes sense (higher or lower, I don't care - just that it makes sense at the time). Got to love this one.

I dumped all the YGE, ANF, LOGI, ONXX, FWLT, HOLX and MICC. This leaves me with a small, tidy portfolio at the moment, with reduced holdings of JASO, GILD, MR, TNH and GENZ. New today - I added an inital tranche of SLT at ave. 27.35.

MR, by the way, is seeing significant volume going up and could potentially show us a real breakout >45; keep an eye on that one and watch the volume as it approaches that level.

This was a huge move in this group, compared to an otherwise reasonable rise in the general market indices the last few days. This tells me that these names are indeed live and they should be reconsidered for further attacks. Leadership plays are making sense for the year end, as expected, following the recent bottom in the market.

At the same time this pekid-volume-breakout syndrome I've been alluding to continues...and continues to bother my gills. Check out the weak-volume breakout list given out here on Friday. I don't think there is a name among them whereby volume has confirmed a legitimate breakout of 3-4 x's normal trading volume - add MCD to the list today.

Most of these names continue to drive higher, to be sure, but the lack of volume suggests there is no real support now at their previous consolidation-highs. So while ISRG and MOS look like they should get support on a pullback to their previous base, that may not be true. Consequently, determining benchmarks and potential risk is a bit difficult. There is not sufficient volume to prove significant new buying interest, which would suggest support at the previous consolidation levels. If selling pressure begins rising, then there is no real support where you would be counting on it.

Another unpleasant and continuing trend - new 52-wk highs in the market remain very small. There is nothing special in the number of new highs in the NYSE and in the Nasdaq we not only have less than 100 new highs today, there are barely more new highs than new 52-wk lows.

Sum it up - outside of the red-hot solar group, the market and the leadership stocks are rising more due to a lack of selling, rather than any serious new buying interest. The market in general is going up mostly because it is no longer being sold-down. This may change as the month progresses, and potentially following the Fed cut(s) tomorrow, but in the meantime it is a little too suspect for me to hold an aggressive position. If buying pressure doesn't begin to increase, it won't be long before selling pressure takes charge instead.

I cried all the way to the bank and I'm pricing Bermuda Triangle hunting packages just to maintain my healthy spirit; but I'll keep it light in the market until the money looks easy again.

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