Once again, market players are out of position for strength and are scrambling to add long exposure as this market refuses to let them in easily.
On Wednesday, some folks were convinced that a major change in market character was kicking in as Italy bond yields jumped higher. Many commentators were predicting that the next phase in the crisis was beginning and that it would be a slippery slope back down for the market.
What the bears overlooked was that way too many market players missed out on the October rally and were still very underinvested. They are anxious to rack up some performance before the end of the year and are looking for pullbacks they can buy aggressive. When the pullbacks only last a day they start to panic and chase strength.
With the exception of Apple (AAPL) it is a sea of green this morning. Once again we have very highly correlated action with NYSE breadth hitting 10 to 1 positive. All major sectors are green with oil, steel, retail and banks leading. Gold has come back also as the dollar weakens against the euro.
I'm one of those underinvested bulls myself and am not having an easy time putting money to work. I added to a position in Simo Motion Technologies (SIMO). Web.com Group (WWWW) is still one of my favorites after its strong report. I continue to like Flotek Industries (FTK) and C&J Energy Services (CJES) in the oil sector and added Alon USA Energy (ALJ) in that group. Indian Internet plays Rediff.com (REDF) and Sify Technologies (SIFY) are on my radar. Opko Health (OPK) is an interesting setup after an upgrade this morning.
I'd like to get more going but small-caps are staying volatile and not making it easy. If we test the day lows the selling will likely pick up fast but for now the main focus continues to be trying to find some additional long exposure.
