The Chase Is On

 | Feb 03, 2012 | 11:05 AM EST
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The bears were ready to sell the jobs news but they turned into short-squeeze fodder instead. The pessimists point to a drop in the labor force participation rate to explain away the drop in the household unemployment rate, but there is no question that more jobs were created in January than anticipated.

As I wrote in my opening post, I'd prefer more volatile action than this high-wire act but we have to take what we are giving and that is a one-way move to the stars and beyond.

There is only one way to play this action and that is to chase strength. Even the dip-buyers turn to chasing when we have this sort of action. The chasing style can definitely work but it requires very tight management. Obviously, the risk of a quick reverse is quite high, so you have to be ready to bailout at any minute.

Zoltek (ZOLT), which I discussed yesterday, worked extremely well and I'm taking partial profits, but this is a story that may be a longer-term hold. I'll be looking for opportunities to remount as it develops.

I have a handful of other trades, like American Superconductor (AMSC) and Magic Software (MGIC), that are open but I'm inclined to flip them fast and keep hunting for more. This environment is not conducive to building position trades, and it won't be until we have some consolidation or a decent pullback.



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