Trading in an Extended Market

 | Feb 06, 2012 | 10:48 AM EST  | Comments
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Stock quotes in this article:

jazz

,

fslr

,

nlst

,

per

,

zolt

Dip-buyers are like Pavlov's dog: all they need to hear is the opening bell and see a little red and they start buying. It is an automatic response because it has worked so well for so long.

One of these days the dip-buyers will jump in, find themselves trapped and panic sell, which will produce a long-awaited correction -- but today isn't that day. The tipoff will be when the bounce fails and we take out the opening lows. As long as we don't breach the early lows, the bulls will be content and keep pushing.

I continue to do what I always do in an extended market, which is try to flip into strength while continuing to look for pockets of momentum. My inventory levels are getting lighter as I run out of things to sell into strength, but I still have smaller trades going in Jazz Pharmaceuticals (JAZZ), First Solar (FSLR), Netlist (NLST), SandRidge Permian Trust (PER) and Zoltek (ZOLT), my stock of the week.

I'm playing things very tight and watching to see if we test the early lows, but these dip-buyers are stubborn and aren't going to give up without a fight.

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