Stay Focused on Stock-Picking

 | Mar 26, 2012 | 9:20 AM EDT  | Comments
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Stock quotes in this article:

aapl

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ma

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lnkd

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pcln

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isrg

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invn

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gluu

Zen is not some kind of excitement, but concentration on our usual everyday routine. --Shunryu Suzuki

For a while, the biggest danger in this market has been overthinking the action and anticipating a change in market character. We have had remarkably consistent action in the first three months of 2012 and if you simply embraced it and stuck with the trend, you have probably done fairly well.

This week, with the end of the quarter upon us, there will be window dressing, which will help maintain the upside pressure. Folks who have had a strong quarter will want to maintain their gains while those who are lagging will likely push to make up some relative performance.

It would probably be more interesting if I wrote about how a major market shift is about to occur at any moment, but there isn't any evidence of that. Plenty of market players are hoping that the market might do something dramatic because they are tired of the one-way action and the lack of volatility but there just isn't anything to indicate that we are going to see any big change soon.

One thing that plays in favor of the bulls is that the action is slow and steady. While sentiment is positive, it isn't frothy and we aren't seeing any wild emotional extremes. In fact, there is a fairly high level of frustration and plenty of underinvested bulls, which are providing plenty of support. The dip-buying action in this market is just plain remarkable. It has worked every time and we shouldn't be at all surprised that it continues when it has been so profitable.

The best way to handle this market is to simply stay focused on your individual stock-picking and ignore the macro arguments. The bears have been telling us for months a major reversal will be soon hitting and they have been dead wrong. If you have been trying to play index shorts in anticipation of a top, you have had a very tough time.

What is working well right now is focusing on individual stocks that are acting well. Big-cap momentum names including Apple (AAPL), MasterCard (MA), LinkedIn (LNKD), Priceline (PCLN) and Intuitive Surgical (ISRG) are attracting hot money players and continue to act well. There are also pockets of good technical action like InvenSense (INVN) and Glu Mobile (GLUU), which I mentioned last week.

If you play the good action in individual stocks and don't keep worrying about a big market shift, you can do fine. It might not make for very exciting market commentary, but excitement is overrated when it comes to making money.

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