This Momentum Is Tenuous

 | Dec 29, 2011 | 11:18 AM EST
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We have the slow drift up this morning following mediocre economic news. Big-cap momentum was under pressure after negative comments from Goldman Sachs about Amazon (AMZN), but that is being shrugged off as window-dressing pressures resume. It's too easy in this environment to push stocks around, so we have to be careful trusting any theme to last.

Oil is taking the lead, but strength in financials is helping the mood the most. Weakness in the euro is being ignored, except when it comes to precious metals, which are being pounded.

This market has so little real support that the risk of a sharp dip is high. The buyers are happy to walk things up in thin volume, but there is a vacuum of underlying support and some sizable air pockets if the action falters.

I have very little going and expect to finish the year with substantial cash holdings. I don't see any compelling charts, especially with volume so light. There are interesting fundamental stories that I'll be watching more closely in the new year, but there is nothing in that regard now.

A good example of the dilemma that traders face is Insulet Corp. (PODD). The stock has a solid chart and is challenging the breakout level around $19, but volume is miniscule and there's no way to trust it gaining momentum. In fact, playing for a failed breakout may be the smarter trade.

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