StockTwits 50, July 2

• Posted by Ivanhoff
• on June 30th, 2012

Who said that summer trading is boring? Another crazy week is behind our back. The St50 momentum index managed to gain 2.02%, but not without heightened volatility and sudden turnarounds.

The usual “Window dressing” characterizing an end of a quarter didn’t have its typical impact. Beaten down basic material and energy stocks outperformed significantly last week, while many momentum stocks struggled up until Friday. Window dressing works best when the market has been in an uptrend. In Q2, all major indexes lost ground and there was no reason to chase at the end of the quarter. There were no names that institutions had to own.

The best performing St50 stock for the week was again a biotech name – $PCYC. It continues to defy all rules of gravitation and mean reversion and it is already up 114% for the 15 weeks it has been on list. It seems dangerously extended from its base, but then if you look at some stocks from the same sector, like $MDVN for example, you realize that $PCYC could go much higher.

One by one, the old market leaders have been dropping from the St50 list. Last week, I mentioned that Monster Beverage ($MNST) looks vulnerable and the stock broke down below its 50dma on Thursday. Its long-term trend is still intact, but nevertheless after 29 weeks and 52% return, $MNST is out of the list for now.

Another long-term member of St50 that left the list is Chipotle Mexican Grill. $CMG fell to its rising 200dma after an analyst warned against deterioration in same store sales. You could say a lot about current sentiment by the way the market reacts to bad news. In a bull market, bad news is generally quickly forgotten and has little impact. In high-correlation environments of elevated uncertainty, there are many weak hands that are looking for a reason to sell. $CMG has been finding buyers near its rising 200dma since March 2009, when it was a $50 stock. The story of company’s growth is far from over, but there is a difference between a company and its underlying stock.

$UA went from being at all-time highs to testing its 200dma in two weeks. Recent weakness in the apparel industry is certainly weighing down on this market leader. Nike reported much lower than expected numbers in its Asian operations, which only confirmed the poor price action in its stock. Sometimes the market can be an ingenious discounting mechanism. As the saying goes, CEOs might lie, analysts might lie, but charts rarely do. The good news for $UA is that it currently derives over 90% of its revenue from North America, which makes it insured against the issues plaguing global brands. The bad news is that the market might not really care.

$DDD broke out to another all-time high after its technology was certified for use in the healthcare markets, which provides gigantic potential for growth. 3-D printing continues to be one of those secular themes that capture the imagination of Wall Street. There are currently only two publicly traded stocks from this industry – $DDD and $SSYS, and demand outpaces supply easily. $DDD is already extended above its most recent base around $25, but it is certainly a stock one needs to keep a close eye on.

$CSTR closed near its all-time highs despite warning that its deal with NCR will hit its earnings. With 30% of its float being sold short, this one could be quite volatile in short-term perspective.

The “official” kick off of earnings season is just around the corner. At this stage, there are ten or so companies reporting every day. As usual, those reports provide information that changes market perceptions and in many cases leads to significant repricing. The good news is going into earnings season, expectations have been significantly lowered, which is a good predisposition for surprises. The bad news is that the most recent reports that came from Ford, Nike, Fedex painted a gray picture of global slowdown. Earnings season is typically a market of stocks environment. New trends will be born. Old ones will be extinguished.

Here are some setups to keep a closer eye on for next week: $SXCI, $MLNX, $ALLT, $MGAM, $ALGN, $TNGO, $TDC, $LNKD, $CERN, $GNC, $LF, $ISRG, $ULTA, $ZUMZ, $AAPL, $TFM

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 July 2 New July 2 Removed July 2

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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