Thursday, December 30, 2010


We had a flight to garbage today. It is classic holiday trading action once again, with the hot money very active in highly speculative stocks. Small-cap China names are dominating the momentum action. Stuff like CHGS, XING, CDII, CPSL, CNAM and CHNR are attracting the momentum money, while the quality leadership names like AAPL, GOOG, CRM, FFIV and CMG are acting poorly.

Breadth is positive but there isn't any clear sector leadership. Energy and coal are exhibiting some relative strength while gold and regional banks lag. Once again it's a market for daytrading junk stocks. If that isn't your game, there isn't much to do right now.

I'm still concerned that this very frothy action in speculative junk is a sign that we have a dip coming soon, but seasonality is helping to hold us steady.

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