The Action Is Positive but Tough

 | Dec 22, 2011 | 2:04 PM EST  | Comments
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Stock quotes in this article:

vhc

,

simo

,

invn

Conditions were very good for low-volume elevation, and that is exactly what we are seeing. We have been drifting upward most of the day and just managed to make a new intraday high. Breadth is solid but volume abysmal.

Positive action doesn't necessarily make for easy trading. I guess you could just buy a leveraged ETF index play and wait for the payoff. In fact, I'm sure that many are doing just that, and that is why the market is running, but if you trade individual stocks, it's very whippy and uncertain. Stuff that looks good one minute, like VirnetX Holding (VHC) and Silicon Motion Technology (SIMO) quickly reverse on a little flurry of profit-taking. You just can't be trusting.

I'm stalking a few names that I like that just aren't moving yet. If they pop, I'll jump in for the aggressive short-term trade, but you can be sure I won't stick around for long.

A good example is InvenSense (INVN), which is my stock of the week. I'm expecting initial coverage any day from Goldman and Morgan Stanley, who were the underwriters of the IPO. The stock had priced strong and has traded fairly well, and at some point I expect to see some anticipation of this coverage. I don't trust the market enough to load up, but I'm keeping a very close watch on it and will be adding quickly once it shows some signs of life.

The action is positive, but trying to find an edge is very tough. The risk of reversal is also running very high, so maybe some focus on the short side wouldn't be a bad idea.

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