Have media stocks come too far too fast?

Be cautious, however. Why do I say this? Well, check out the volumes on all three. They're not too convincing. As an example, while the 30-day average volume on Viacom's class A shares is pegged at 136,000 shares, the stock has traded, as of around 3:50 PM, roughly 107,000 shares. Remember that price action means nothing without significant moves in volume.

Significant increases in volume signals institutional confidence. Without such confidence, a stock's rally could be short-lived. That's why I would not buy Viacom today. It's up over 8% at my last look, but I'm just not impressed by the breakout.

Plus, you have to consider that a lot of the recent bullishness in the markets could be sourced to short-covering rallies, a phenomenon which leads to short squeezes. Considering that all three of the media stocks mentioned here depend on advertising revenues and consumer confidence, and taking into account that we are still in a recession, I'd say that buying these names after their recent upward movements might not be the most prudent move ever. Yes, they all are cheap. But I don't believe we've exited the dark, bearish woods just yet. As soon as we enter, in unequivocal fashion, into the more open bullish fields (and I'll look to volume characteristics over time to confirm such sentiment), I'll feel better about buying on upswings and breakouts.

Disclosure: I own Disney; positions can change without notice.