It Isn't Speculation that Speculative Action Is Helping Drive Momentum

 | Dec 18, 2017 | 11:05 AM EST
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Positive seasonality combined with anticipation that the tax bill will be passed soon are helping to keep the strong momentum rolling. Breadth is stellar with more than three gainers for each decliner and the number of new 12-month highs at more than 750.

There is a little relative weakness in biotechnology and semiconductors, but the FAANG names more than make up for it and the crypto/blockchain frenzy continues unabated.  Don't underestimate how the action in this small group of stocks impacts the overall market mood. The critics don't want to admit it, but when stocks move like these bitcoin plays it helps to provide positive sentiment for the whole market. It may feel frothy and unsustainable, but that isn't an issue on the minds of people right now.

I continue to play the group with long positions in Inc. (OSTK) , US Global Investors Inc. (GROW) , Seven Stars Cloud Group Inc. (SSC) , MGT Capital Investments Inc. (MGTI) , Social Reality Inc. (SRAX) and several others.  These stocks likely will have some sharp pullbacks this week, but for now the long side is the right side.

I'm looking for other small-caps that may attract some speculative interest this week. Remark Holdings Inc. (MARK) , which is an artificial intelligence play, is my Stock of the Week.  I'll be digging for other plays as they develop.

Twitter Inc. (TWTR) was a new addition to the Sharkfolio last week and is looking like a momentum stock now. I trimmed my outsize position a bit but will consider additions as it develops from here.

A "sell the news" index play likely is developing before the end of the year for those who are watching for an index play. The timing will be tricky, but once this tax bill is signed and delivered to the president it can get dangerous fast. The last week of the year usually sees some selling at some point, anyway, so don't be too sanguine about positive seasonality.

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