The Strength Is Deceptive

 | Jul 13, 2012 | 11:28 AM EDT  | Comments
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Stock quotes in this article:

orex

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mdgn

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mlnx

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affy

The indices look strong this morning and breadth is nearly 4-to-1 positive, but under the surface I'm not seeing the sort of frenzied buying those facts might suggest. In fact, I'm seeing quite a few fades, and key names like Apple (AAPL) don't seem to be gaining any traction.

Small biotechnology names continue to attract attention with stocks like Affymax (AFFY), Orexigen Therapeutics (OREX) and Medgenics (MDGN) running. Merck (MRK) is leading big-cap names, and homebuilders are probably the hottest group.

I suspect the main driving force today is hope in front of the big news events next week. The market is oversold enough to attract some technical buyers, and we know that any whispers of QE3 will ignite the bulls. Given Fed chief Ben Bernanke's tendency to be market friendly, there are plenty of folks willing to place bets today.

I don't have much new going on. Mellanox Technologies (MLNX) is one I've been trading. It has earnings next week and may run up in anticipation of a good report. My inventory levels remain low, but I just don't see much to add right now.

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