There was mild profit-taking in opening trading but no big rush for the exits, and buyers are now jumping back in. Though the indices have turned green, breadth is a bit soft. There are signs of underlying support and continued strength in Google (GOOG), Williams-Sonoma (WSM), Amgen (AMGN) and Target (TGT). Steel, coal and retail lead while precious metals and chips lag.
With the Fed on deck this week, I don't anticipate the bears being able to gain much traction. There will likely be consolidation and bouts of profit-taking, but the bears are dreaming if they are looking for a major breakdown here. Markets that act like this don't suddenly fall apart.
Despite the generally good action, there is weakness in a number of momentum names, including Apple (AAPL), LinkedIn (LNKD), Kors (KORS) and Mellanox (MLNX). If that broadens to other momentum favorites, I'll increase my caution quickly.
Homeowners Choice (HCII), my Stock of the Week, is off to a good start and there is good follow-though in others I've mentioned lately, such as Hi-Crush Partners (HCLP) and Home Loan Servicing Solutions (HLSS). I added a position in Nationstar Mortgage (NSM), which may be a good FOMC-decision play, and I like small biotech stock Sunesis Pharmaceuticals (SNSS).
Overall, it remains good trading but I'm avoiding all the macro Sturm und Drang.
