Finally Some Solid Action

Wednesday’s market action was perhaps the best of the rally that began on March 1, as called by the Investor’s Business Daily. Ignore the scary headlines, the problems in Greece, people burying gold bars in their back yard – look at the buying. We had a big up day Wednesday and more importantly, the stock market’s leaders surged ahead. Now that’s a great sign.

Jim Cramer essentially made this point today on Mad Money by saying go ahead and hurdle the figurative road construction signs, detour signs, etc. that are thrown up by various pundits in the media and move forward with the rally. Incidentally, he’s calling for a Dow 12,000, which seems reasonable to me.

I haven’t put up many posts because I haven’t made any moves until today. Perhaps I should have jumped Tuesday, but many of the leaders moving that day were educational stocks, which are mostly extended.

Yesterday we saw semiconductors, among others, make big moves on the quarterly earnings report of Intel, which itself broke out of a 3 weeks tight pattern. Such stocks as MRVL, ATHR, CREE and POWI, to name a few, made big moves higher on strong volume. MRVL and ATHR are actually both still in buying range.

You could argue that MRVL is 7.8% extended from its $20.93 buy point in a cup with handle, but I felt that handle was a little sideways moving, which I didn’t like. It also went almost nowhere after the initial breakout on March 23, not unlike many leading stocks (one of the negative aspects of this rally). I prefer to look at Wednesday’s move as a break out from a cup shaped patter, which seems more definitive to me. Big volume move as it clears a recent, clear high of $21.76. By that standard, it’s only 3.3% extended.

ATHR is in a slightly different boat. It had a clear break out from a cup with high handle on day two of the rally, March 2. But, like with most leaders, it essentially went nowhere fast. The day after the break out marked the recent high just before it fell to the 50 day moving average where it found support and shot higher – allowing for another purchase. By that standard, rather than being 7.2% extended from it’s $37.93 cup with high handle buy point, it’s only 3.4% extended from it’s rebound buy point of $39.24.

I may pick up some MRVL tomorrow, but I may also pick up some ATHR. Tough call as they are both in the same space (semiconductor manufacturers). ATHR shows slightly stronger fundamentals, but MRVL’s recent daily technical action is quite strong. Yet when you look at the weekly action, ATHR shows steady volume support. Thus, I may decide on ATHR in the end. One feature I very much like about ATHR is that it’s a young company. It went public in 2004 compared to 2000 for MRVL. I like young companies with hot new products showing tremendous growth.