One thing that I’ve been waiting for since the March correction in the market is the re-emergence of leading stocks making new highs. We did have a rotation into energy, semiconductors, and utilities that helped power the market higher during the March-July time frame. But certain market leaders, companies with new and game changing products needed to get back to making new highs to make this market healthy again. This week we got some nice breakouts in UA, FB, and CMG and AAPL continued to make new highs as well. For now those four horsemen are leading stocks that should help show the direction of the market.
There are plenty of stocks though that had huge moves in 2013 into early 2014 that are severely damaged and taking a long time to recover. I’m talking about a lot of IPOs in the tech space like TWTR, FEYE, YELP, etc. Many biotech stocks are still badly damaged, some are trying to make new highs again though like CELG and BIIB. After hours tonight some big names are getting punished though like AMZN and NFLX has had a pretty serious drop since it’s earnings report.
The point is there is some leadership coming back but there’s still a lot of carnage taking place in certain stocks. One other thing that I find interesting about the action in 2014 is the wide ranging volatility in some of these stocks over multiple months. That action could be indicative of a bull market top if more stocks don’t start making new highs.
