There are plenty of jaw-dropping predictions out there regarding where the market will go in 2012, but Tuesday’s session reminded me a lot of what we saw last year. The sharp opening gap higher forced swing traders who had put in the work to organize a watchlist to exercise a good deal of restrain to not chase, as we hit session highs on the S&P 500 within the first hour of trading. Beyond that, you would think that stocks like MasterCard, which had been a notable leader in 2011, would be out in front of this huge move to start the year. However, MA finished down over 1%.
The clear leaders on Tuesday were in the energy/materials complex. Not far behind, though, was the impressive action in many financials. The hardest part about this type of highly selective market is staying on top of what is actually working versus what appears to have a chance at working, but then fails miserably to do just that. Taking it one day at a time, I look at a chart like regional bank HCBK on a day when the financials performed well, and I see a stock breaking out from multi-month resistance.
With wildly ambitious predictions everywhere, I will stick to focusing on whether stocks like HCBK can actually hold a break out for more than a day or two.