StockTwits 50, July 9
- Posted by Ivanhoff
- on July 7th, 2012
For the week, the St50 momentum index appreciated 1.03%, outperforming the S & P 500 and the Nasdaq Composite by a good margin.
While the market indexes were consolidating in a typically slow 4th of July week, under the surface there were some quite sizable moves among individual stocks. The thinner holiday market allowed for easy manipulation and many beaten down laggard stocks staged massive short-squeeze rallies.
Sixteen St50 stocks gained more than 3% for week, eight lost 3% or more. The pot with the winners was quite diverse – healthcare svs, biotech, entertainment, apparel, specialty retailers, real estate development.
The two best performing St50 stocks for the week were $MGAM and $LF. The former makes networked gaming systems for casinos. The latter produces educational entertainment toys for children. $LF broke out from a solid long setup and finished the week at new 3yr high. $MGAM made new 5yr highs. Other gaming slots producers $IGT and $SHFL have also been under accumulation lately.
A number of same store sales were reported earlier in the week. Most of them were quite timid, but the weak readings were somehow expected and already discounted by the market. Not every piece of new information is surprising. The market is often forward looking and discounts in advance events with high probability. Maybe, this is why the retail stocks index $XRT outperformed the general market substantially last week. Discount retailers continue to be the strongest performers in the field. Dollar stores $DG, $FDO; discount apparel $TJX and $ROST; general discounters $COST and $WMT, all trade near multi-year highs. The three specialty retailers on the St50 list – $GNC, $SBH and $ULTA – are also looking strong. The consumer is never dead. She just reallocates money to different brands based on fashion and economics.
The U.S. Dollar had quite a comeback, driven by more easing efforts by central banks across the world (ECB, England and China), who are trying to jump start their economies. The green lizard is near 52-week highs against a basket of world currencies, which will have some serious implications for the bottom line of U.S. companies with major international exposure. A quick glance at the charts of $RL, $WYNN and $MCD reveals that the market has been discounting that dollar strength for quite some time.
On the downside, cloud and data processing software stocks were hit seriously on Friday, after Informatica Corporation ($INFA) warned about postponed deals and huge drop in new licensing sales. European companies have massively scaled back on new major purchases, causing $INFA to slash substantially its earnings forecast for the second half of the year. As a result, many other software names plunged in sympathy. Teradata ($TDC) lost almost 10% for the week. Even high-growth, security software name like Firesourse ($FIRE) cracked down. Both of them have lost their place on the St50 list.
The current market is not for armchair economists or the intellectually lazy. You really have to be nimble and don’t overstay your welcome in positions. There has been decent improvement on the all-time high list, but the number of good risk to reward setups is not very large, which advises for more caution. There are quite a few extended stocks that need to consolidate their recent breakouts to potentially offer secondary buying opportunities.
Organic food stocks have been holding firmly above their rising 50dmas: $HAIN $WFM $UNFI $TFM
Social media stocks also stand out in terms of relative strength: $Z, $LNKD, $TRIP
Other setups that deserve attention include: $CERN, $EAT, $ACHC, $KORS
Earnings season is knocking on the door and no doubt, it will have a major impact on individual stocks. Preannouncements have been quite negative, which has lowered expectations significantly. This is good news for those handful of companies that will overdeliver. Every earnings season there are plenty of them and the market usually rewards them with higher prices.
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)
Download the list: St50 July 9 New July 9 Removed July 9
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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