The All-Time High list has been growing steadily over the past week, which is technically a good sign. Any indicator needs to be looked in context. In this case, defensive, boring and low growth industries represent the majority of stocks on the list, which doesn’t bode well for the sustainability and potential of the recent rally.
Let’s take a closer look:
Agricultural Chemicals: $CF $TNH
Autoparts: $MNRO $AZO
Beverages: $HANS $KO $FIZZ $ABV
Discount Stores: $PSMT $DG $DLTR
Utilities: $PGN $ITC $UIL $WGL $NI
Personal Products: $NUS $KMB $CL $CHD
Fast food restaurants: $DPZ $ARCO $MCD
Medical Equipment: $MAKO $ELGX
Gold Miners: $RIC $RGLD
Other names on the current all-time high list: $RGR $WCN $MKTX $TUDO $MLI $AFSI $PRA $PSA $NNN $ACC $FRT $CATM $PRGO $CVV $FCFS
They say that the most vicious one-day/week rallies happen in bear markets, when the correlation between most stocks is close to 1.00, meaning macroeconomic factors and sentiment overrule individual catalysts. Today was a typical example.
There are currently 2611 stocks priced above $5.00 and trading at least 100k shares a day.
872 of them appreciated 5% or more today.
Only 11 of them reached new 20-day high.
Only 1 – new all-time high and this is $HANS, which is probably one of the best performing stock of all-time, being up almost 17,000% for the past 10 years.
Other stocks on the all-time high list include: $FIZZ, $CF, $UN, $MCD, $RGR and $ED. It is still pretty thin.
Rallies happen when there is an immediate catalyst or when there are expectations about an approaching catalyst. Did buyers show up today because the economic picture is so bad that it assumes another edition of QE? It is not really that relevant.
The market never moves in a straight line. The technical picture is still broken. It seems that every week there is a new set bad news coming from Europe, China or Washington. The market gaps down a couple percentage points and a few days later, everything is forgotten.
Any price recovery has to begin from somewhere. Today’s market action was a good start, but the overall price and mood trend is still down, which basically means that any gains on the long side should be considered guilty until proven otherwise. Trade accordingly.
There is not much going on the new high list, which means that risk appetite is still on vacation and so should you in regards to your market exposure.
Other than the usual suspects lately: utilities: $SO, $EM, $D; gold miners: $GOLD, $NGD and fertilizers: $CF, $TNH, a new name appeared today: $ARCO or the so called Macdonald’s of South America. I am watching it closely, but in the same time I am really suspicious to any breakouts in this market environment. Only a few days ago, $CBOU and $DTLK broke to new all-time highs, only to be quickly faded. Both are down more than 10% for the week so far.
Other stocks that are holding well so far include: $RGR $HANS $MJN $MG $MCHX $MA $MITK
Staying on the sidelines is still the better alternative. I know it is hard, but discipline should always prevail conviction and biases.