Last trading day of 2006

Today is the last trading day of the year. It will be followed by 4 days holiday. So expect some crazy moves. Profit taking dominated the day. There is also some divergence between the DOW, S&P and NDX. The NDX is often the pilot fish on down moves.

In last couple of weeks growth seems to be back in favor with many high EPS and IBD kinds plays finding bids.The large caps have been hibernating. Some stocks with good earnings in last earning season are breaking out after sideways move. For example PNSN broke out three days ago.There are many other stocks like PNSN, IGLD, RVSN, VDSI, GROW etc which have broken out of their range in last 3 days.
GROW,U.S. Global Invest Inc A (Google  Yahoo  Earnings BW  Chart)
IGLD,Internet Gold-Golden (Google  Yahoo  Earnings BW  Chart)
PNSN,Pension Worldwide Inc (Google  Yahoo  Earnings BW  Chart)
RVSN,Radvision Ltd. (Google  Yahoo  Earnings BW  Chart)
VDSI,Vasco Data Security Intl (Google  Yahoo  Earnings BW  Chart)

Drugs/biotech seems to be shaping up as good theme. The biotechs move on news and regulatory action. The large cap biotechs have not been actively participating in some of this action. But keep an eye on some of the stocks in this list.
AMGN,Amgen Inc (Google  Yahoo  Earnings BW  Chart)
AOB,American Oriental Bioengineering Inc (Google  Yahoo  Earnings BW  Chart)
BIIB,Biogen Idec Inc (Google  Yahoo  Earnings BW  Chart)
CELG,Celgene Corp (Google  Yahoo  Earnings BW  Chart)
CRL,Charles River Labs Intl (Google  Yahoo  Earnings BW  Chart)
DNA,Genentech Inc (Google  Yahoo  Earnings BW  Chart)
HTI,Halozyme Therapeutics Inc (Google  Yahoo  Earnings BW  Chart)
IMCL,Imclone Systems Inc (Google  Yahoo  Earnings BW  Chart)
MEDI,Medimmune Inc (Google  Yahoo  Earnings BW  Chart)
PDLI,PDL BioPharma Inc (Google  Yahoo  Earnings BW  Chart)

Momentum is cyclical. lasts on index for few days but on individual stock can last for long time(on stocks with significant catalyst). So many of the stocks breaking out in last couple of days have more room to run, even if the overall market goes down.

Obviously the pure momentum plays like FFHL and anything remotely to do with China still continues to offer free money for momentum players. The thing about such plays is unless you have an existing well organised system to identify them or anticipate them you should not play them. By the time you realise what happened the party gets over.

Having pure momentum based systems in your arsenal is always an edge in most market circumstances. I have written extensively many times on how to approach this. In fact this year end I added more momentum based components to my systems and added few more momentum based black boxes.

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