Despite the huge gap down on Friday, it was quite a positive week for equities in general. A budget deal seems a mirage, but recent economic data and price action have been improving significantly.
Last week underperformers were gold and silver miners, whose breakouts and breakdowns in 2012 were constantly faded. There were also some event-driven declines in gun stocks ($SWHC, $RGR); Herbal Life ($HLF), for which Bill Ackman put a $0 price target; and $RIMM, which gave guidance that investors didn’t like.
There is lot more to talk about on the positive side. For the week, the St50 index appreciated 3.46%. Breakouts and new highs were all over the place.
There should be no doubt that the market theme of the year is housing recovery. Most of the best performers in 2012 are related to the industry – homebuilders, property insurance, home improvement stores, mortgage investors, building materials, banks. Last week showed us more of the same. The FED’s open market operations have managed to keep interest rates low and alter market perceptions of those stocks. Let’s see if momentum will carry their strength into 2013 as well. More and more stocks that are directly or indirectly related to the housing sector are appearing on the St50 list.
3D printing stocks $DDD and SSYS reminded us of themselves last week, each gaining more than 10%. They are among the best performers in 2012 ($DDD is up 260% YTD; $SSYS is up 161%), so there was an element of end-of-the-year window dressing too. Organic earnings and sales growth is not quite there for them yet, but their story is a fascinating one that captures the imagination of the mind. Market is a discounting mechanism and the perception of future profits is what drives price activity in story stocks.
Taser ($TASR) also had a monstrous week as apparently it is viewed as a “gun-alternative” product in a time where weapons restrictions are expected to increase. It continues to trade very clean technically and found support near its rising 50dma.
Another major theme of the year was the exceptional performance of specialize outsourcing and staffing agencies. Almost all stocks in the group have done exceptionally well: $AHC, $BBSI, $THM, $ASGN. On Assignment ($ASGN) has been consolidating for the past three months and now it seems ready for higher prices. $20 is a potential pivot.
Half of Wall Street is on vacation next week. Market volume will naturally be below average, but that does not mean that there won’t be opportunities. Some of the decent long setups to observe include: $IPGP, $POL, $DK, $CYBX, $QIHU, $TRS, $WD, $HW, $SIRO, $AZPN, $ASGN, $MANH, $KORS, $ACHC, and $SBNY
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