They hesitated a few minutes after the gap-down open, but those dip-buyers are doing their thing again and have the market at the highs of the day. We are still in the red, and breadth is poor at better than 2-to-1 negative, but that underlying support is impressive.
From a technical standpoint, the key now is to hold above the early lows. If the lows are retested, the bears will become hopeful and start pressing. But as long as the dip-buyers continue this level of support, there isn't going to be much interest in fighting them. Keep in mind that we are nearing the end of the month and there may be a greater tendency than normal to hold the market aloft.
I'm sticking with my game plan and trying to knock out quick long trades. While there are bounces, there isn't much follow-through, so there is plenty of quick flipping.
I'm keeping oils like Royale Energy (ROYL) and ATP Oil & Gas Corp. (ATPG) on the radar, and I see technical setups that I like in Emulex (ELX) and Zynga (ZNGA). ELX, for example, has been pulling back on light volume and now needs to turn up and take out the highs of the last few days. The stock has an attractive valuation with earnings per share of $0.77 expected for the fiscal year that end in June 2012, which is 43% growth compared with a trailing price-to earnings ratio of 16.
I'm going to keep digging for more buys, and it doesn't look like I'm alone.
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