More of the Same

 | Feb 08, 2012 | 10:45 AM EST  | Comments
  • Comment
  • Print Print
  • Print
Stock quotes in this article:

EPAM

So far, this morning is a continuation of Tuesday's one-way action. We paused briefly and now are stair-stepping straight up again. Breadth is solid at better than 2-to-1 positive with banks, chips, steel and coal leading while biotechnology takes a breather.

As I discussed in my opening post, this is classic computerized trading. The high-frequency trading algorithms keep pushing the market in a straight line as they fire off millions of trades for fractional gains. As long as we keep trending, they can continue to buy and sell in miniscule increments and extract steady gains.

Several readers have asked how to deal with this sort of action. The answer is to acknowledge it and don't try to fight it. The reason that this works so well for the computers is because there are still so many traders who try to fight it. They feed the action and accentuate the moves being created.

I have to remind myself constantly not to let my desire for pullbacks cloud my view of what is actually happening. We'll see a sharp pullback at some point, likely when the algorithms reverse, but the timing is the challenge. I'd love to load some index shorts, but until we actually have some weakness, I'm not going to try.

I have a few minor trades going, but yesterday I went very heavily to cash and locked in gains. There are a few things on my radar, such as EPAM Systems (EPAM), which is a new offering that began trading today, but mostly I'm biding my time.

Columnist Conversations

Weyerhaeuser (WY) is seeing further weakness after penetrating the channel support I noted yesterday. It looks...
Blow off highs tend to take place on significant news days. In recent years, the monthly employment report ha...
Market trying to hold on to minor gains as we head into the close. Equities have been in a pretty narrow trad...
Shares near $4 and a buyer paid 50c for nearly 1500 Sep 5 calls to open a new position 25% above spot. Earning...

BEST IDEAS

REAL MONEY'S BEST IDEAS

Columnist Tweets

BROKERAGE PARTNERS

Except as otherwise indicated, quotes are delayed. Quotes delayed at least 20 minutes for all exchanges. Market Data provided by Interactive Data. Company fundamental data provided by Morningstar. Earnings and ratings provided by Zacks. Mutual fund data provided by Valueline. ETF data provided by Lipper. Powered and implemented by Interactive Data Managed Solutions.


TheStreet Ratings updates stock ratings daily. However, if no rating change occurs, the data on this page does not update. The data does update after 90 days if no rating change occurs within that time period.

IDC calculates the Market Cap for the basic symbol to include common shares only. Year-to-date mutual fund returns are calculated on a monthly basis by Value Line and posted mid-month.