Forget the Big Names

  • Posted by
  • on February 18th, 2011

For a moment, remember that it takes money to move these stocks.  OK, maybe not much to move them, but definitely to keep them there.  We’ve seen a relentless bid under the markets for days/weeks/months, putting pressure on portfolio managers to “keep up”.  Thats not strong hands, that’s weak hands that will run at the first sign of trouble.

As I said here, that doesn’t mean to short.  The demand is steady, and supply has been unwilling to shake free.  But with all of the little names showing their capability to move, why not grab exposure with 1/4 the outlay?  Whether it’s small caps or fallen angels, the opportunity is there to stay involved with the long side while being positioned in names that started their move in January, not July.

I have little negative to say about the supply/demand structure of the markets now, but risk/reward leaves me no choice but to play in the area of greatest potential.  I don’t have time to run through names now, but take a look at what experts like Alphatrends, ZorTrades, HarmonGreg, OptionRadarGtotoy, SpyderCrusher, 1nvestor, ChessnWine, LegacyTrades to name a few, have been showing as good setups.  These guys have been good enough to stick with the trend, but are responsive enough to know when to get out of Dodge.

Point is, it’s a musical chairs market with an appetite for risk…that doesn’t mean the glamour names are the place to go at the moment.  The far right column of my Leaders List shows where in the range for the week each stock trades; a look at the following graphic shows the median stock to be at the 32% percent mark for the week while the SPY sits at its high:

Move along, nothing to see here except some great companies no longer leading the charge.  It will be hard for the indices to keep up the rally without REAL money pushing these names, but the next best thing is to rent some cheapies while the appetite is there.  The time for shorting will come sometime, for now just think about which names could attract enough attention from the newly engaged public AND don’t need $1 billion of trading per day to keep them up.  Earnings season is mostly over, it’s macro time again and hot potato is the most likely outcome.  I’ve become re-engaged with these names of late, and find much better pickings than in the names that led us from September to February.  I’ll do the best I can to share my findings as time permits.

The information in this blog post represents my own opinions and does not contain a recommendation for any particular security or investment. I or my affiliates may hold positions or other interests in securities mentioned in the Blog, please see my Disclaimer page for my full disclaimer.

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