You Can't Convert the Market

 | Jun 10, 2014 | 12:30 PM EDT
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We are back to a time when flat is the new down.

As cautious as I hear folks are viewing this market, it appears that sellers are even more cautious. We're seeing momentum pick up again in Twitter (TWTR) and Facebook (FB). I'm looking for some pin action in Weibo (WB) here. It is already having a good day, but I'm thinking a bit longer timeframe. Should WB get over $20, then I believe we see a test of $24 again. I'm looking at a half-size position here with a stop on a close under $18 and I will make it a full-size position on a close over $20.

Fusion-io (FIO) has caught my eye as a possible turnaround play, finally. Unfortunately, I've known so many folks who have been burned on this name. I think any purchase here has to be made with an option-like mentality. Rather than buying the stock, I'm considering going with something like the Dec. 5 calls and just riding them out. The company has no debt and plenty of cash, so bankruptcy isn't a worry here. But the cash isn't something that is necessarily going to spur a buyout offer. I think any buyer wants to see a turn in the company first, although I don't think a buyer would wait too long once the sun starts shining on FIO again. Perhaps "if" is a better word than "once."

A few others which have caught my attention today are Interxion (INXN), Lands' End (LE), On Assignment (ASGN) and Ubiquiti Networks (UBNT). I really think UBNT went ultra-conservative with its guidance last quarter and there is huge upside here. It is more of an aggressive play, but if I'm right this stock will be fetching more than $50 by the end of the year.

Lands' End is tough to commit to here for anything other than a trade. I'm just not sold on anything with a relationship to Sears Holding (SHLD) at the moment, including Sears Hometown and Outlet Stores (SHOS), which looks like it is about to fall off a cliff under $20 per share.

I'm still trying to be selective in my trades and my positions here, staying with individual names and maintaining a defined-risk profile. I certainly wouldn't consider using margin here to get over 100% invested, nor would I get aggressive on the short side just yet. A gentle reminder here not to force your beliefs on the market.

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