Monday, November 4, 2013

Momo Moving to Solar

Just like in 1999 and 2000, the momentum train is fluid, and the leading horses shift every few months.  The momentum train that started off this year with NFLX expanded out to TSLA and the solar names, such as SCTY, FSLR, and SPWR.  Then you had FB blow out the earnings number and that put a huge run into the social media and cloud plays like YELP, SPLK, and CRM.  Somewhere along the way, the Chinese internets joined in the fun, with BIDU, QIHU, etc. getting pumped up.

Now we are working our way back to the solar names, with SCTY and FSLR leading the way.  The hot money got a little scared by the subpar reaction in FB and YELP and want the safety of stocks that are less sensitive to a deteriorating economy.  Based on past bubbles, you will get a return to the FB and YELP group after a short period of basing.  We should probably accelerate higher again sometime this month.  Although there is a fly in the ointment is the toppy action that I am beginning to see in the broad market averages, with small caps and financials beginning to underperform, a bad sign long term for the market.  But I don't see a big pullback that would stall the momo fever, due to the end of year tailwinds in a strong up year.  This gives these momo names a lot of room to run higher as fund managers chase beta in a flattish market.

On the market, I am neutral at the moment, we should trade this tight range from ES 1745 to 1770 for the next several days.

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