Better Action, but Not Perfect

 | Oct 24, 2011 | 10:28 AM EDT  | Comments
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Stock quotes in this article:

aapl

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bidu

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mrge

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auth

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tklc

Friday's upbeat mood continues as market players remain optimistic about positive news out of Europe. Too many folks were caught underinvested last week and now they are struggling to gain long exposure. The fear that the market will continue to run without them creates major performance anxiety.

We have very good early breadth as stocks remain tightly correlated. Oil, steel, coal, gold and banks are leading while only pharmaceuticals are exhibiting weakness. Big-cap technology names look better as Apple (AAPL) and Baidu (BIDU) regain their footing.

I see some good-looking small-cap charts, but they aren't working as well as I'd hoped. For example, Merge Healthcare (MRGE) looks very attractive as it breaks above $7 on very good early volume, but it isn't running the way I'd expect when a stock shows up on the momentum screen.

AuthenTec (AUTH) is another low-priced stock that can't seem to gain any momentum, despite a great setup and a tie to Apple.

Tekelec (TKLC), which is my stock of the week, is up a bit, but like most of the other good charts, it isn't gaining any immediate momentum.

We have the risk of surprise news out of Europe, but I'm sticking with long trades and trying to put some money to work. I'd like to see the charts respond better, but at least there are some to choose from this morning.

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