StockTwits 50, June 18

• Posted by Ivanhoff
• on June 16th, 2012

For the week, the St50 index appreciated 1.6% while the S&P 500 and the Nasdaq Composite gained 1.3% and 0.5% respectively. The market benchmarks are still below their declining 50dma, but under the surface there has been a notable change of character among individual names over the past few days.

Momentum stocks outperformed for a second week in a row. They typically lead the recovery from any market correction. The 52-week high list is expanding, while stocks that consolidated sideways during the market turmoil are breaking out.

One could make the argument that many of those who needed to sell have already done so or have bought enough puts to protect themselves, improving the supply-demand balance. Short-sellers are not willing to push and risk it before potential coordinated action by the major central banks. It wasn’t that hard for buyers to push prices higher. We even saw IPOs that were left for dead rekindle – always a good sign of returning risk appetite.

Market bottoms are typically a process and never an event. People usually adopt slowly to change.

The best St50 performer for the week was a biotech – $QCOR, which made a new all-time high. One can’t help but notice the relative strength in biotech, medical equipment & instruments, and healthcare services – $ABAX $CERN $CYBX $PCYC $CATM $ALGN $ALXN $SXCI.

From the group, $SXCI stands out with a potential pivot of $96.50

When was the last time U.S. based retailers’ stocks have been doing so well? Impressive performance for the whole sector: high-end – $WFM, middle ground – $TGT, discount – $WMT; Even dollar stores’ stocks are hovering near multi-year highs: $DG, $FDO, $DLTR. Lower than expected inflation is certainly good news for their margins.

Speaking of lower inflation and gas prices, restaurants also stand to benefit – $EAT managed to hold aobve its rising 50dma during the market pullback and it is now back near highs.

A lot of setups are starting to show up, which is always a good base for a potential rally. Take notice:

• Business software continues to be strong $LPSN, $AZPN, $TNGO
• Social media stocks thundered back on Friday – $LNKD, $Z
• A semiconductor that stands out is Mellanox ($MLNX). It has already doubled year-to-date and it signed a new contract with Intel last week.
• A big data play $TDC is also starting to perk up. Gained 4% on Friday trading above its average volume.
• $EXPE didn’t even bulge during the market correction and made new all-time high on Friday.
• $ULTA is holding its earnings breakout. $SBH looks ready too.

Other setups that deserve attention include: $SWI, $CSTR, $PKT

There was notable weakness in global brands with heavy Europe exposure during the week – $NKE, $RL, $TIF, $COH.

Under Armour is in the same business as Nike, but it derives 95% of its revenue from North America and this was reflected in its stock. $UA is less than 1% below its all-time high while $NKE tested its rising 200dma.

Keep in mind that the Greeks are having another election this weekend and supposedly the whole world will be watching. So much digital ink has been spilled on Greece over the past 2 years, that one can make the argument that the worst case scenario has already been somehow discounted. The Greek stock market is down more than 90% from its highs in 2007. Why are people still talking about the threat of Greek default. Greece has essentially already defaulted. I am not going to pretend that I know how the market will react to the results of the Greek elections. My take is that the market move will not be as volatile as commonly expected disregarding of the outcome.

The fear is that Greece is the first domino that will push other, much bigger and therefore harder to handle countries like Spain and Italy. Europe-related headline risks are here to stay for quite some time and it is something you have to learn to live with. They are not going anywhere. They’ve been here for the past 2 years anyway and somehow the U.S. equity market has managed at times to shun the negativity and have pockets of substantial appreciation.

See the daily charts of the St50 stocks on finviz; also weekly charts. Take a look at the About section to gain my perspective on how to use the St50.

You can easily follow any or all of the stocks in the ST50 on StockTwits by clicking here.

Have A Great Weekend!

~ Ivan Hoff (@ivanhoff)

St50 June 18 Removed June 18 New June 18

The information in this blog post represents my own opinions and does not contain a recommendation for any particular security or investment. I or my affiliates may hold positions or other interests in securities mentioned in the Blog, please see my Disclaimer page for my full disclaimer.

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