Once again, bears looking for the gap-up open to fade quickly were disappointed. There was a slight dip, but the indices are hitting new highs and seeing squeeze action. Breadth is excellent again, at around 5-to-1 positive, and all major sectors except utilities are in the green. Banks are leading, with oil and retail also making a good showing.
Unfortunately, this market offers major challenges if you are trying to add long exposure. Three big gap ups in five days does not exactly create great charts, especially if you don't like to chase lower-volume moves.
I'm digging for stocks that aren't extended and on the brink of a breakout. Flotek (FTK), which I've discussed a several times recently, has the sort of action I like to see.
One that I added this morning is Silicon Motion Technology Corp. (SIMO), a Taiwanese designer of flash drives and things of that sort. It has posted solid beats the last four quarters and is threatening to break through major resistance at $20. This is the sort of stock that should attract momentum players looking for exposure.
It is tempting to try to fade this market strength since we are obviously a bit frothy, but I want so see weakness before I give it a go. Right now, the bulls are still pushing. If we break the early lows, profit-taking should pick up.