Shake Off the Fear

 | Dec 14, 2011 | 1:30 PM EST  | Comments
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Stock quotes in this article:

cjes

,

simo

,

ftk

,

pkt

,

inhx

,

wwww

,

invn

,

allt

,

vhc

,

mhr

We are finally seeing a little stabilization in the indices on news that France has not heard anything about a potential debt downgrade by Standard & Poor's. That rumor has been out there all day and helped to generate early downside momentum.

The question now is whether we can find some support and turn back upward. We certainly have been digesting plenty of negative news lately and are looking a bit washed out, but buyers need to shake off their fear and build a little confidence. The biggest problem the bulls face lately is that the buying has been so lacking in energy that it fails to draw in additional buyers who are afraid the market may bounce without them. Instead of further momentum, we are seeing day traders flipping into strength.

I continue to maintain optimism that we will see a good-sized move before the end of the year, but I have yet to act on that thinking to any great degree. As I've been writing, the key is better price action. Once I see some, I'll react it to it and be more aggressive with my buying, but all we have so far is a weak attempt to turn up.

If you are going to use a reactive approach to the market, the most important thing you can do right now is to solidify your plan of action. What stocks do you want to buy and want entry points are you looking for? The time to do your research is now. That way you can move quickly as conditions develop.

Names on my watch lists include C&J Energy Services (CJES), Silicon Motion Technology (SIMO), Flotek Industries (FTK), Procera Networks (PKT), Inhibitex (INHX)), Web.com Group (WWWW), InvenSense (INVN), Allot Communications (ALLT), VirnetX Holding (VHC) and Magnum Hunter Resources (MHR).

I like to keep small positions in names on my watch lists and then move quickly when the stocks set up. Right now, I'm in no big rush to add.

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