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What Works: Biotech, Large Cap Tech, Precious Metal


A few weeks ago, many of these stocks looked like short opportunities, but have since come back with a vengeance.


I believe yesterday's late day ramp put the ball back into the bullish court. It was a good day all around, however at 3:30 PM, when the bears started to press and it looked like we were going to have another lousy close, it only lasted for 15 minutes as the bulls showed up to take us into the bell only fractions away from day highs. This was definitely something new and could possibly be the change in character we need going forward. This morning's soft open is much more appealing to the bullish side as well, as it allows people to wade in and pick up some bargains if they missed out on yesterday's move.

I am now watching for a squeeze to take place in the financials and mortgage related stocks. If the bulls can squeeze these stocks, I suspect it may shoot the averages back above key levels which, would then give trapped longs the opportunity to lighten up in the laggards i.e. financials, and rotate into names that are working.

At this point it is important to stick with what is working which is Biotech, Large Cap Tech and Precious Metal. Names like Adobe (ADBE), Broadcom (BRCM), Cypress Bioscience (CYPB) and Taseko Mines (TGB) grace my watch list today. I also like the move we have been seeing out of the energy related names. A few weeks ago, many of these stocks looked like short opportunities, but have since come back with a vengeance. Today I am watching Encana Corporation (ECA) and Oceaneering International (OII).

Last but not least, I am curious if the base metal group can get moving, insinuating that the rest of the world isn't yet ready to stall like the American economy. I like Freeport McMoRan (FCX) over $92.20 and Metal Management (MM) over $47.40.

I realize it is a lot to digest this morning, but when markets are moving, it is important to play what is working. Remain open minded and flexible should the action change, however, with so many bears fighting this move, I am curious to see if we can gain further momentum ahead of next week's Fed meeting.
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Position in BRCM.

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