Nasdaq Showing Strength.

Today major indices were mixed ahead of rise in crude oil prices above $61 per barrel and ongoing problems with Iran's nuclear ambitions. In a stark change of pace from Tuesday, the maket over the past few days have turned increasingly bearish with two straight days of down days in DIJA and S&P 500 Indices. Valuclick reported favorable earnings yesterday after market close and today finished up $2.66 on more than 4X average volume at $29.13, further indicating strength. In general, small caps have been breaking out despite seeming weakness in the market place over the past few days. You generally want to see strength in the small caps as they will lead the next phase of the market leg up. However, there is increasingly bearish ominous under tones to this market. Increasing oil prices, unsettling CPI numbers indicative of rising inflation, inverted yield curve, and "sell the news mentality of the current market". Despite that, there is good dose of gloom and doom in the market and many of the market participants are voicing this sentiment. Usually, in a topping market, you will see increased enthusaism and euphoria that leads to a sell off. Based on that notion, I think it is still premature to consider that this market is topping- but we are getting awfully close. Thus I keep one eye open as we have not had any meaningful correction in this phase of the market run up which has me a bit concerned. This rise in the current market is by no means a parabolic rise.

Again, the prior momentum leaders are showing signs of life. Apple (AAPL), Google (GOOG), Research in Motion (RIMM), New York Stock Exchange (NYX) to name a few. Can the momentum start again in earnest? Perhaps in the short term.

I have started to initiate a small bullish position in Google, April $490 call for a total of 3 contracts. I will slowly add to this position over the next few weeks in anticipation for a rise in these shares. If the market doesn't correct and the market sentiment returns to fully bullish stance, then I believe Google can test $550's by April. I wil have one button on the eject button just for good measure. I am also interested in Valero (VLO) and Trans Ocean (RIG) especially if oil prices continue to rise. Today's price action in these two concerns was nothing but good.

I am investigating Mindray Medical Internation Ads (MR) a Chinese medical device maker engaged in diagnostic instruments, ultrasound imaging systems, and patient monitoring systems. It sports a strong ROE of 28% and prior quarter profit increase yoy of 131%, it boasts a reasonable PEG of 1.5. It has broken out of 10 week sideways consolidation today on strong volume up $2.12 and finished at $28.00. The company reports earnings on March 12, 2007.

Another candidate that I am investigating is Heely's (HLYS) the maker of those pesky roller shoes thet bratty kids wear around the mall. They are ubiquitous, all you have to do is run into one of the kids at the mall or while you're out. Again, there is high expectations built into this company. They had one of the most successful recent IPOs in January. None the less, PEG is 1.76 a bit higher than say Crocs (CROX) with a PEG 1.08. This should come down a bit after their earnings release. Revenue and Quarterly earnings both grew at 190%+ yoy, a tremendous growth. Analysts are expecting $.28 EPS. I think that they should be able to handle this number handidly. If they beat and guide up, this stock could see $45 to $50 within the next few months. There are bearish sentiments on this company. It only has one product line and many people consider this a fad. But like its counter part Crocs (CROX), I believe that this company will try to parlay into more diversified offerings while staying true to its roots, by selling fun shoes with lots of sports appeal to kids. The down side obviously would be that there already is a slew of skeptics who want to see this stock fail.

As always, be careful out there.