A Good Old-Fashioned Melt-Up

 | Jan 18, 2012 | 1:45 PM EST
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We're seeing some good old-fashioned melt-up action today. After the weak finish Tuesday, many folks were thinking the market was due for some consolidation and maybe even a little profit-taking, but the bulls have just kept on pushing.  

The most notable action today is in "old technology" names ignited by earnings from Linear Technology (LLTC).

The report seems to be pulling a slew of chip stocks higher, among them Texas Instruments (TXN), Micron (MU), Altera (ALTR) NXP Semiconductors (NXPI), Analog Devices (ADI), Maxim Integrated Products (MXIM) and Atmel (ATML). Analysts have recently been negative on the group, and on Intel (INTC) in particular, so it looks as though some poor positioning is helping to boost the sector to an even greater extent.  

Once again we're seeing how dangerous it can be to try and call tops in this market, even when the major averages are technically extended on light volume. There are good reasons to think the market could use a rest -- but, in recent years, whenever that's seemed to be the case, stocks have just kept on running. I suspect that is driven by the wall of worry I discussed in my opening post this morning. To a great degree, it is also helped by programmed trading that benefits from sustaining a move.  

I continue to work on a number of smaller trades with short time frames, but it is a real struggle to put any substantial cash to work for long. I have no interest in trying to short this action, but embracing it aggressively for more than a short-term trade is nearly impossible.

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we like this chart here, it appears ready to move higher. BOUGHT BZUN OCT 35 CALL AT 3.40
Large-cap, high-quality McKesson (MCK) is too cheap now, at $147.51 or so. The stock hit $243.60 more than 2.5...



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