The market is exhibiting solid follow-through momentum this morning, with the hot money actively chasing a number of things. The obvious driving force is a potential quantitative easing announcement from the Federal Reserve Wednesday. Market players are keenly aware of how the Fed can drive the market with this news, and they want to make sure they have some long exposure. But there is no guarantee the Fed will act and I suspect a little nervousness before the announcement.
It is nice to see momentum stocks moving like they should during uptrends. Names like Sourcefire (FIRE), SXC Health Solutions (SXCI), Web.com Group (WWWW) and Pharmacyclics (PCYC) have been attracting attention, however, the king, Apple (AAPL), is down and I've cut my position.
Although the action has been strong, I've been a net seller and haven't made any notable new buys. I'm looking for at least one bout of profit taking prior to the Fed announcement, as conservative traders lock in gains and remove the risk that the Fed may not announce QE3. Meanwhile, maintain discipline.