Sticking With Long Plays

 | Jan 23, 2012 | 11:41 AM EST
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Many market players were anticipating a sell-the-news reaction to Thursday night's action. It didn't happen on Friday, and they are still leaning the wrong way, waiting for this market to reverse. A big drop in bonds is fanning talk about a rotation into equities, which is contributing to the strength, but this looks primarily like good, old-fashioned squeeze action so far.

Breadth is very solid, with 3450 gainers to 1650 decliners.

The Market Vectors Oil Services ETF (OIH) is down, but all other major sectors are up, with banks, precious metals, coal and natural gas leading. Apple (AAPL) is also helping the bullish cause after a poor day Friday, as market players anticipate its report tomorrow night.

Although I'm itching to try an index short, I'm not seeing any real weakness yet, so I'm sticking with long plays. Silver has some momentum, and my stock of the week, Golden Minerals (AUMN), which I've discussed previously, is doing well. There are some good bounces in natural-gas-related plays, and I'm taking some Endeavour International (END) in the energy sector.

I'm particularly pleased to see some better action in small-cap technology stocks, and I'm playing a few things such as Datalink (DTLK) and Emulex (ELX). Jazz Pharmaceuticals (JAZZ) is developing nicely in the biotech group, and I'm looking to add back shares there.

We have some good trading but the market is in nose-bleed territory. I can certainly understand why many are anticipating a reverse soon, but I've learned far too often that it is better to wait for weakness rather than anticipate it.

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