StockTwits50, September 3
- Posted by Ivanhoff
- on September 1st, 2012
It feels like there is more juice left in this rally. There are quite a few long setups still showing up. Stocks that were overbought and extended just consolidated sideways and now look ready to test new highs. At the same time, the number of warning signals continues to grow.
Every time Bernanke speaks lately, precious metals and treasuries rally to the moon. As I mentioned last week, historically such a combination hasn’t been positive for equities, so I try to be very nimble in this environment.
For the week, the St50 index gained 1.18% while the S & P 500 and the Nasdaq Composite lost some ground. We are right in between the acceptance and the euphoria stages of this market rally, where momentum stocks and small caps typically outperform.
It has been a while since the last time there was a gold miner on the St50 list. $RGLD just made it, which usually means that there are many other precious metal stocks that are setting up and have price momentum behind their back.
There are two apparel retailers that are scheduled to report earnings next week – $FRAN (Francesca Holdings) on Tuesday and $LULU (Lululemon) on Friday. Both of them have had quite a run in expectations of good reports, so they better meet them. The current market is not in an “all forgiving” mood for sure.
Just take a look at what happened with $TFM (The Fresh Market) last week. They beat earnings estimates and reported an acceleration in sales growth, but issued a conservative guidance for the rest of the year – something that is quite typical for most companies trying to manage Wall Street’s expectations. The market didn’t like the lack of confidence and what seemed like a decent earnings gapper on Wednesday morning turned into an absolute bloodshed later that day. $TFM pierced its 50dma and then quickly recovered as buyers stepped in.
$TFM isn’t the only stock that has recently experienced major profit taking on its earnings day. $CSOD, $CYBX, $SYNT, $AZPN had similar destinies, but they recovered quickly after that. It seems that no one is willing to chase stocks on their 3rd or 4th consecutive earnings gap. The higher prices are used for profit taking, but then any pullback to a rising 20dma or 50dma is welcomed as a buying opportunity, probably by people who have missed the trend and didn’t want to chase. My take is that the increase in short-term fluctuations is a sign that we are in the midst of an ownership transfer in many of the momentum stocks. The average price that the new owners have paid is much higher than the sellers paid, which will make all those stocks much more vulnerable to general market selloffs when they come. As always, it won’t matter, until it does.
Here are some good risk/reward long setups for next week: $HSTM, $N, $ALXN, $EBAY, $CSOD, $MGAM, $MHO, $BIIB, $ALGN, $OSIS
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.
And one more thing – starting this week, I will start to add some social data to the list in an attempt to showcase how investors’ psychology changes throughout the different stages of the price cycle. Expect to see more of it in different nuances.
I am on vacation next week, so my updates on StockTwits will be sporadic.
Have A Great Weekend!
St50 Sep 3 New Sep 3 Removed Sep 3
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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