Not Fade Away

 | Jun 29, 2012 | 11:08 AM EDT  | Comments
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A gap-up open on news is always going to attract those looking for a quick fade. The problem is that it is very easy to be squeezed if there is good dip-buying support. If things don't fade quickly, the chances of a trend-day will increase.

So far, there's good underlying support, which is a function of many market players being caught by surprise when the European news hit. They are trying to find long inventory, and the idea of buying a dip has great appeal again. The fact that it is the end of the second quarter is probably also providing support. It has been a rough quarter, but some mark-ups might ease the pain a bit. 

I'm one of those underinvested folks looking for entries but I haven't been able to add much. Mellanox Technologies (MLNX) is on my radar, and I like the action in biotechs Medivation (MDVN) and Amyris (AMRS), but I haven't been able to put much cash to work.

One thing I've learned is that I will always be holding high levels of cash at market turns. It is the nature of a momentum approach to the market and I don't let it bother me much. If the market continues to act well, I'll put more money to work but I'm going to lag a bit today.

The market is holding up well, but it sure seems quiet. I expect volume to thin considerably this afternoon but that may be an opportunity for the machines to keep walking us higher. I'm not anticipating a major fade at this point.

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