On Tuesday, in the midst of one of the largest rallies this year, one of the biggest items we stumbled across almost went unnoticed.
The data miners at Bespoke discovered that the stocks in the S&P 500 that have done the worst since January 6, did the best overall during Tuesday’s climb. Stocks that did the best averaged a 4.39% increase while the worst performers added 18.3%.
We’ve been discussing the once-in-a-lifetime discounts on the market right now, and it appears Wall Street is starting to rub the Depression out of its eyes and wake up.
Does that mean we won’t have a pullback as the pros do a little profit taking – probably not. For money managers staring at some of the worst losses in a decade, profit is profit, and they should take some of that off the table.
Look for a couple days of profit taking.
This week should be a nice psychological “shot in the arm” to start getting the major players back in the water. Think of them as sharks. If they can’t smell “blood in the water” – meaning profit potential – then they’re going to stay away.
Strong multiple-day rallies are just the thing to rouse the big money managers and get the market moving again. As these up days become more common, expect the volume to increase as the participants do. This should give us more cause, not less, to find a few more values out there.
For a few more “beaten up” companies trading under a dollar, take a look at Advance America (NYSE: AEA), Anthracite Capital (NYSE: AHR) and Tuesday Morning (Nasdaq: TUES). All represent aggressive, speculative purchases for investors comfortable with risk. But all could give big returns to investors.
Companies mentioned in this article: AEA, AHR and TUES.
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