After a lousy afternoon Monday, stocks are finding their footing today as hope runs high for a big QE3 announcement from the Fed on Thursday. You can find plenty of reasons to bet against this market, but as long as the long shadow of the Fed is out there, you can't expect too much downside. The worse the news is, the more optimistic the market grows.
Precious metals and commodities have bounced back, which is a sign that bets are being placed on QE3. Retail is slightly weak and there's mixed action in some of the big-caps, such as Google (GOOG) and Amazon (AMZN), but breadth is solid at better than 2-to-1 positive.
I'm sticking with long trades but I'm playing things tight, which means some quick flipping when I have gains. I continue to like the mortgage-related plays, such as Nationstar Mortgage (NSM), Ellie Mae (ELLI) and Impac Mortgage (IMH). A couple of others on my technical radar are oil refinery HollyFrontier (HFC), which has a solid base and is looking to test recent highs, and Performant (PFMT), a recent initial public offering involved in the debt collection business. PFMT needs to move back above $11.25 to resume its momentum, but it has decent support and it could perk up again.