Market going from momentum to value?
One day does not a trend make. However, evidence from today's action indicates at least a short-term market-wide desire to find value rather than momentum in stocks.
As everyone knows, most of this year has been marked by extreme gains in few stocks whose valuations have climbed to astronomical levels (Dell among them) while the majority of the market has been in what some have termed a "stealth bear market."
Today, while the dow struggled to gain 30 points, the NASDAQ powered forward 2.2% and even more surprisingly, the Russell 2000 showed similar strength. The Russell has been so bad this year that even the single days where it outperformed the Dow/S&P can be counted on one, maybe two hands.
The computer sector gives a further indication of the trend. Dell, up a mild 1% paled in comparison to the substantial gains of the more beaten-down and/or undervalued stocks like GTW, CPQ, and AAPL.
As a side note, I track on a daily basis some 16 small and medium cap tech stocks, and some that have seen literally nothing but downward movement for months jumped as much as 15-20% off their lows today (see FEIC and ADTK for examples).
James Cramer from thestreet.com has similar interesting thoughts on the subject (a really good site, by the way, although not free).
I will watch the Russell 2000 and my own Andrew 16 over the next few days with peaked interest. A market that turns its attention to bargains is a boon to the undervalued fruit stock we all know and love (well, some of us at least).
Andrew |
