They say that change is the only certainty in the stock market, but change happens in a structured and often almost predictable way. More often than not, 80% of the market move is concentrated in about 20% of the trading days. The rest of the time is dedicated to consolidation. Stocks cycle between periods of range expansion and range contraction. Last week was an example of range expansion.
For the week, the St50 index appreciated 1.09%.
The best performing stock on the list was $CRAY. It gained 12% after receiving a new sizable contract for its supercomputers. When it joined the list 14 weeks ago, it was one of the most under-followed momentum stocks, trading near multi-year highs. 50% later, it is not exactly an undiscovered gem anymore, but its trend is still intact. Maybe a little extended and in need of some form of consolidation.
The more people think that 3D printing is a fad , the more $DDD and $SSYS keep charging higher and defy gravity. Another positive week for them and new all-time highs. Trend following works. $DDD joined the St50 list 41 weeks and 170% ago and we weren’t even early.
It is still a risk-on environment, where small cap and small float stocks (aka recent IPOs) continue to outperform. Bull markets often end when there is not a single cloud in the sky, but trying to guess a turning point or even worse, force it in your mind, is a futile experience. Usually the market gives plenty of signs before a correction occurs. Just open your mind and watch for clues. Underperformance of small caps and momentum stocks would be one of those clues. It has not happened yet.
We are in the midst of an earnings season. A lot of major tech companies are scheduled to report this week, $AAPL and $GOOG among them. Their reports will likely point the direction of the next market rotation. Maybe the tech sector will finally catch up with the rest.
You can easily follow any or all of the stocks in the ST50 on StockTwits by clicking here.
Have A Great Weekend!
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