Banks were given the green light to play with their cash and it seems they are eager to buy back their own shares – more demand, less supply.
We have been wondering why anything non-U.S. has been performing so poorly lately and on Saturday morning, we have our answer – several big banks in Cypress had to be bailed out. It will be interesting to see if the U.S. market pays any attention to this on Monday or if it just yawns – which is the most likely scenario.
For the week, the St50 Momentum index finished flat, though producing big movers in both ends of the performance spectrum.
On the losing side, 3-D printing stocks continued to show notable weakness. After 49 consecutive weeks on the list and reaching over 200% return at the peak of its performance, $DDD is finally gone. However, $PRLB and $SSYS are still on the list.
Let me remind you that not only are there different catalysts that matter for different time frames, but there are also different market participants that buy at different stages of the product/service cycle. The Market strives to be forward looking and it loves to discount a good story and price stocks for perfection, but nonetheless its optimism never continues indefinitely. Stock prices often rise in anticipation of huge growth. At some point in the future, those expectations have to be met or even exceeded by real earnings and sales numbers. And when that happens a whole new set of market participants step up to the plate and buy, which sustains the price trend. A good story can only get you so far.
Chinese $QIHU broke decisively below its 50dma in sympathy with many other emerging market stocks.
The price action in $EBAY keeps deteriorating. After 45 consecutive weeks on the St50 list, the stock is gone.
On the positive side, small cap medical appliances and instrument stocks remained strong and produced another big winner – $CSII.
Software is eating the world, but making shareholders in enterprise software companies rich. $CVLT broke out to new all-time highs on heavy volume.
Big hedge funds, like Blackstone and Carlyle Group, continue to invest heavily in individual U.S. homes, helping the sector recover. Not by accident, any industry related to U.S. housing is still exhibiting notable relative strength – property insurance, building materials, homebuilders. On the St50 list, $PHM and $DHI are setting up again.
$MELI, which has become popular as ‘the eBay of Latin America’, is consolidating after a rather sizeable move since the end of February. The odds are that it will try to test the $100 mark in the coming weeks.
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Have A Great Weekend!