So far, the action in 2012 is looking much like it did 2011. We had a big overnight gap followed by not much movement. If you weren't in overnight, there are no easy entries and you're already lagging badly.
We have some impressive strength, with breadth running better than 6-to-1 positive. Financials are leading but oil, gold and commodities are hot on better economic numbers out of China. The U.S. dollar is weak, and bonds are under pressure.
There is no easy way to deal with big opening gaps when you are underinvested, and there is likely to be more than the usual number of folks with heavy cash positions since they closed the books last week. The question is whether performance anxiety kicks in and they start chasing. If you weren't heavily long to start the day, you're already substantially lagging the benchmarks.
With action like this, I don't want to go on wild chases, but I'll try to participate with a few buys that don't look too extended. Cobalt International Energy (CIE) is one that I took this morning due to strong recent momentum. Small-cap oils continue to look interesting to me, and I'll be watching for more entries.