Big gap-up opens, like we saw Wednesday morning, always give me mixed feelings. It is great to ring the register on some nice gains, but new entry points then become quite difficult. I find them particularly hard to find when the folks in the media are jumping up and down predicting that stocks will now go straight up for the next year.
A move like this always produces performance anxiety, but I suspect this session is particularly bad in that regard. Not only is it the first day of the new year -- a time when everyone wants a good start -- but many are probably underinvested due to the uncertainty created by the "fiscal cliff" debate. I doubt many were well-positioned for a massive gap up on the first trading day of 2013.
If you are underinvested and looking for long exposure, like I am, I suggest you stay patient and be selective. Yes, some things will run away without you, but the important thing is to stick with whatever methodology you prefer to use. Don't just jump in and start buying because you are afraid of being left out. Even when the market does gap up like this, the setups will come if you are patient.
I've been a net seller in the early going and have taken some gains in positions I've mentioned, such as in Qihoo 360 (QIHU), St. Joe (JOE), SouFun (SFUN), Silica (SLCA) and MagnaChip (MX). I have a couple minor new positions -- most notably Home Loan Servicing (HLSS), which has been digesting a recent secondary offering.
I'll be more active with my buying later in the day. Right now I want to focus on building a list of prospects, and then we'll see what the action looks like as emotions cool.