Twitter Foils the Experts

 | Dec 24, 2013 | 1:31 PM EST
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Traders were anticipating some sort of Santa Claus rally, but I doubt that many expected action as strong as what we have seen the past week. We continued to chug away to new highs, although it was a bit more mixed today, and there are few signs that we are going to stop. It is a bit extended out there, but when is the last time that really mattered?

The star of the show has been Twitter (TWTR), which is making a parabolic move. What is particularly interesting is that 23 analysts cover Twitter, and the highest target is $65. The average target is $43.82, and the median target is $46.00. These are supposedly some of the sharpest fundamental analysts in the world, yet they really are clueless as to how speculative action can move a stock like Twitter when the environment is right.

Twitter is exceptional, but the same dynamics at work there are affecting the broad market as well right now. It may seem illogical if you are looking at spreadsheets, but as momentum players know very well, the key to success is to stay with the trend as long as you can. We'll see how much more juice the bulls have next week as volume dries up even more.

I want to wish everyone a very Merry Christmas and happy holidays. It is a great time to forget the markets for a while and to focus on the things that matter most. I'll see you on Thursday.

Dec. 24, 2013 | 10:27 AM EST

A Holiday for Market Favorites

  • Buyers are partying with Twitter, Tesla and small-caps.

Classic holiday trading action continues. Breadth isn't quite as strong as Monday's, but the bulls continue to frolic. They are going crazy with Twitter (TWTR) and Tesla Motors (TSLA) and some small-caps, but we do have some mild profit-taking in Apple (AAPL), Facebook (FB), Amazon (AMZN), Google (GOOG) and others.

I'm trying to enjoy the party as best I can, and I even chased a little Tesla to get my foot in the door. I suspect that could squeeze higher after the Christmas holiday as the traders who have enjoyed Twitter look for another candidate. I just have a token position at this point but will look for some entries as it develops intraday.

Small-caps are mostly mixed with some pressure on solar energy, 3D printing and biotechnology. It should continue to be random and choppy, with traders battling back and forth between locking in some gains and trying to run up some more names like Twitter.

Dec. 24, 2013 | 7:31 AM EST

Yes, Traders, There Is a Santa Claus

  • Far too many market players give up on positive action too early.

"Alas! how dreary would be the world if there were no Santa Claus.... There would be no childlike faith then, no poetry, no romance to make tolerable this existence."

-- Francis P. Church, "Is There a Santa Claus?" (a.k.a., "Yes, Virginia, There Is a Santa Claus"), New York Sun (Sep. 21, 1897)

Santa Claus has been quite kind to the market recently (if not all year). We continue to plug away, make new highs and are showing few signs of stopping.

The easy thing to do is to reflect on why this action can't last much longer. We all know it will eventually come to an end, but far too many market players give up on positive action too early and end up giving away gains they could have seized if they simply set aside their fears and had a little childlike faith.

There is no question that the market trades much differently now than it did in the years before the Great Recession. There are far fewer individual investors, hedge funds are struggling to keep pace, computerized trading dominates, and the Fed is more important than ever. There is nothing easier to do than complain about how artificial and manipulated things are these days. That may make the folks who have missed out feel better, but it doesn't do much to produce profits, which is really the only thing that matters if you are playing this game.

While there are those who whine and moan about this "fake," we don't want to go too far the other way and start believing that this action will last forever. We need to embrace it and celebrate it while we can, but all good traders need to cultivate some skepticism as well, as the one consistent thing about the market is that it will eventually change.

We have a half-day of action today, and there is probably going to be a little battle between those who want to keep on pushing for more momentum and those who are anxious to lock in some profits and call it a year. Many folks won't be working between Christmas and New Year's, and today is the day they will close the books and start looking forward to 2014.

We have little news flow and little movement in the early going. Traders are still pursuing Twitter (TWTR), Facebook (FB) and Apple (AAPL), and that is likely to be the primary theme once again. Watch for stops at the intraday lows to signal the start of a little profit-taking.

We'll see what develops but very thin half-days of trading are not always easy to navigate.

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