The Bull party continues. The number of divergences is growing, short-term volatility is rising, momentum stocks are lagging (the St50 index gained only 0.25% last week), and yet sector rotation keeps the indexes floating high.
The next sector rotation in pointing towards the tech sector. $QQQ finally broke out from a month-long range and it is starting to catch up with the rest of the market.
The other current sector leader is Energy. Refiners seem to be making new highs every day. Oil drilling companies are also breaking out.
Uptrends are typically “market of stocks” environments. We can clearly see that on the St50 list, where 8 stocks gained 3%+ for the week while 10 declined 3% or more.
Generac ($GNRC), which makes power generators, finally cleared new all-time highs. It is up 70% since the Hurricane Sandy hit the East coast. Judging by price action, expectations are very high for the earnings report coming this week. It won’t be unusual to see a gap up and sell the news event.
3D printing is still among the hottest market stories. A new member of the group debuted on the public scene. The ExOne Company ($XONE) priced its IPO at $18, opened at $25 and proceeded to finish the week at $30. $DDD also benefited from the event. It gained 14% and it is back above its rising 20dma. The other established 3D printing stock – $SSYS, didn’t fare as well and technically looks vulnerable to a further decline.
$LNKD just blew out all earnings estimates and gained 21%, finishing the week at new all-time highs of $150. And people thought it was a fad and too expensive when it opened at $80 20 months ago. LinkedIn is just one more example of the irrelevance of P/E ratio for innovative companies that are in the midst of their growth stage.
Homebuilders and any industry related to the U.S. housing recovery have led the market since July. The former have been in a pullback mode in the past three weeks and many are right near their rising 50dma. It is a make-or-break moment for them.
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Have A Great Weekend!