A surprisingly very erratic, volatile week in the midst of what is usually an uneventful summer week. Media hype over “Dow 22,000!” and the major indexes finishing the week flat to up mask the fact that many stocks plunged in price – many by the largest amount of any week in the past two years. A few others did spike up, but most went down, unfavorably for all investors.
This is cause for concern – these enormous abrupt price moves are in reaction to: a) poor research by institutional analysts to identify corporate news (good/bad) in a timely manner, causing an abrupt reaction on the complete surprise when they should have known, b) corporations themselves being deceitful or withholding good/bad information from analysts on a timely basis resulting in shock reaction when finally announced, c) both a and b, or d) institutional investors reacting to additional information likely to affect the stock market that is not even available to the general public yet.
Whatever the reason(s), traders were compelled to react dramatically last week leading to large abrupt price swings. This signals a widespread absence of orderly trading behavior, and that is disconcerting.
An ugly week for our stocks, possibly the most unproductive week of the year so far. Some long positions did rise, even spiked, and many shorts declined, all for gains. But offsetting these were the many long positions that plunged – some wiping out gains that had taken 10 -14 weeks to materialize – resulting in some long-to-short trades and many other longs hovering near the same trade signal.
Active trading is always a “three steps forward, one step back” endeavor, but last week amounted to at least a “two steps back” event for us, and “five or six steps back” for both individual and institutional long-only passive investors, no matter what the indexes suggested.
Highlights: 4 new weekly highs in long positions. 5 stocks with double-digit long gains:
OEC +13% BZH +22%% LPSN +85% NEFF +100%
Congrats to those of you locking in long gains of +42% in FIVN (30 weeks) and +47% in FRPT (21 weeks).
4 new weekly lows among short positions. No stocks with double-digit short gains.