Fertile Market Yields Big Movers -- But Don't Chase

While the market continues to behave just fine, the worry warts are still a vocal bunch, content to talk about reasons why the stock market will face turbulence ahead. True, there are many issues still unresolved on Capitol Hill when it comes to the deficit and spending cuts, but one things for certain: Market sentiment's gotten a whole lot better in recent days. There's no need to chase here, but there's nothing wrong with nibbling at some stocks still within buying range. It's called swimming with the market tide. Last week's bullish gap up by the Nasdaq Composite in higher volume -- and equally bullish move by the S&P 500 -- was an unequivocal sign of institutional buying and brings a re-test of the September highs into play. The Nasdaq's weekly gain of 4.8 percent was its largest in more than a year. Bulls waiting for new institutional money to come in from the sidelines saw it happen last week. Any market uptrend needs institutional buying to sustain it. There may one last shakeout before a breakout, but the pieces seem to be in place for more strength. Be careful about chasing stocks that have quickly become extended in price. Stocks in this boat include new market darlings 3-D Systems

and Stratasys

as well as names like Qihu 360 Technology

, Fleetcor Technologies

and Yahoo

. Instead, focus on stocks that are basing or still within buying range after recent breakouts. They could have more left. One name that comes to mind is Varian Medical Systems

. The company makes oncology systems and equipment used in radiation therapy. It has a market capitalization of nearly $8 billion and trades close to 1 million shares a day. The company has a consistent track record of earnings growth and annual return on equity is exceptional at 31 percent. Fundamentals are solid, although sales growth has been decelerating in recent quarters. Some slack should be cut, however, because sales growth is expected to re-accelerate when the company reports fiscal first-quarter results after the close on January 23. The consensus estimate calls for profit of $0.79 a share, up 10 percent from a year ago with sales up 8 percent to $676 million. Technically, Varian looks good. After two down weeks in light volume where it didn't give up much ground, shares popped 4.5 percent last week in higher volume. Varian remains under accumulation as the stock vies for a bona fide breakout from a long base. Recent strength in the market has resulted in a lot of extended stocks, but Varian Medical isn't one of them. Near-term support levels for the stock are $72 and $69. Shares closed Friday at $72.72. Note: Join me for a Webinar this week at Benzinga.com. A 2013 Market Outlook Roundtable: Thursday, January 10 from 7-8 p.m. ET. Sign up here: bit.ly/TIo07p