Momentum stocks

"For those of us who trade names like AAPL or RIMM GOOG BIDU , things don't get any better ...AAPL delivered a nice report and should benefit quite a few momentum names".  Nothing could've have been closer to the truth as momentum stocks ruled yesterdays action.  It all started with a gap up open and then after some shake and bakes midday,  the momo carried into the close.   What we wanted to see yesterday was the follow through that occurred late, the reason being we somewhat feared a repeat of the GOOG earnings.  Seemingly, we were not the only ones as the NASD gave a few shakes before exploding in the afternoon after it took out the morning highs.   Unfortunately, as we all know this market is a jittery one and could turn on a dime with new headlines and this will likely be the case early today as Merrill Lynch will put the credit crunch back in the headlines early on.   It also won't help a few familiar names couldn't keep up to the AAPL's and disappointed after the close.   If you were trading the momo names yesterday,  the action we got was a weeks worth and there would have been some profit taking either way this morning after the big 2 day reversal.  The action yesterday was reaffirmation of why we trade the stocks we do, momentum stocks rule and it is not only the big familiar names that grab the headlines.  The action in the BIDU, FSLR, DRYS's was incredible the past 2 days and the rebounds in the EDU's CETV WBD have not been that bad either.  The melt up to a high of $110 from SPWR was pretty good as well.

Today...we will get a clear indication if the market wants to play the credit crunch game or move on and feed off the many good reports yesterday and maybe give us a rally of sorts during earning season.  No doubt the yo-yo day to day action will continue, but that is something we all should be prepared for after the last few months.   A wait and see this morning... we won't be looking to add positions, but we also won't be selling the ranch at the open.

A trading note,  no matter how well a small cap acts one day as in the case of CRNT...a downgrade the next morning by a small firm should be taken seriously as it can burst a bubble quickly.   It doesn't have to be a tier1 firm, it could be a firm you've never heard of.    It is always better to exit such things early before the news spreads and the selling hits harder.  You can always get back in the game after the dust settles.