Riding the Momentum du Jour

Momentum traders continue to congregate in the small and mid-cap biotechnology issues, not to mention the internet security stocks. While VDSI is reversing sharply lower off its morning highs, CYBR and FEYE continue to run it up on the shorts. 

As we have discussed before, a wildcard for the multi-year bull run for biotechs is that they simply keep going higher and blow-off into the month of March before correcting. As such, the idea is to either get out of their way or participate in the run-up on the long side without straying too far from discipline and chasing gaps higher simply for the sake of gambling. 

While not ideal setups for me, biotech names like ARNA and ONCE are not extended and could easily be basing for a move higher if biotech melt up. ARNA has earnings February 26th, but above that 200-day moving average (yellow line) on the first daily chart, below, it can get going. And ONCE is a new issue which has been basing reasonably well off the IPO. Watch for a move towards $48.