Once again we have gap-and-sit action. We are in a tight range but holding up well as underinvested bulls try desperately to find entries. The biggest positive this market has going for it is that so many are scrambling to keep pace. Although the price action is euphoric, market players have been slow to embrace the action and now the focus is catching up.
We have the peculiar situation of being technically extended but still having very mixed sentiment. That is what keeps us going and is keeping a bid under the market. A big reason for this is that the short termers, who go heavy cash overnight to avoid the risk of bad news, are missing all the moves. All the gains are overnight so when they start the day fresh with a pile of cash they really have to work hard to put trades in.
Breadth is extremely strong again with the NYSE running 2500 gainers to just 315 losers. Oil and banks are leading, but there is little weakness other than gold.
As I mentioned Friday, the best sector theme right now is oil and I'm staying focused there. My stock of the week is Flotek (FTK), which I've talked about quite a bit lately. It has moved through resistance at $10 and is attracting momentum money.
Another stock that is also involved in fracking like FTK that I'm watching closely is C&J Energy Services (CJES). The company is expected to see earnings grow 33% to $4.25 in 2012 but is selling with a trailing price-to-earnings ratio of just 8. It seems to have some support but needs to turn up on better volume.