Author: Ivanhoff

3 Big Movers

The market seems tired as it approaches it declining 50dma. The small caps ($IWM) led to the downside today, indicating that no one wants to risk too much in front of big economic announcements. The latest Unemployment report is expected tomorrow. I don’t think it will have any significance whatsoever. The market has already accepted and probably discounted that unemployment is likely to stay elevated for an extended period of time just like the 0% interest rate and that the economic growth is likely to slow down accros the world. Bad economic news is not really news for Wall Street anymore. It is expected. European banks remain the potential turning points that could impact sentiment.

I have a feeling that both bulls and bears will be disappointed in the next few months and we won’t see neither retesting of the August lows, neither repetition of last September rally.

The recent market turmoil has conditioned many traders to quickly take profits, pull back to safety when the slightest risk is perceived and reduce overall exposure as much as possible. This is what volatile markets do to your mind. They make you much more conservative and urge you to question every trading or investment thesis you have. It is a condition that is curable, but only by the market and through time.

The good news is that the correlation 1.0 period is behind our back and individual stock catalysts matter again. We are in a stock pickers market.

Three big moves deserve to be highlighted today:

$LQDT rocketed 30% to all-time high, trading more than 12 times its average volume. These are the signs of elephants dancing, of institutions buying. The auction website for surplus and salvage assets announced that it has agreed to acquire the consumer goods remarketing business of Jacobs Trading Company for $140 million.

$SPRD, which is Chinese semi-conductor company, advanced 8% to a new 50-day high. Capital has been coming back lately to some of the more established Chinese ADRs.

$DTLK gained 9%, bouncing from its rising 50dma. They had a tremendous earnings report that lifted the stock to new 5-year high back in July. Then, the selloff in August took it down.

43 Stocks Closed at All-Time High

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

1/3 of All Liquid Stocks Went up 5% or More Today

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.