Tuesday, January 5, 2016

The new 52-week high / low rule:

When it applies to investing or trading I have learned – the hard way, two rules.

Rule one – your first margin call will never be your last.

Rule two – the first time a stock appears on the new 52-week high or new 52-week low list will never be the last time.

At the close January 5, 2016 – the S&P/TSX Composite Index closed at 12920 down 7.01 points or (-0.05%). There were 12 new 52-week highs and 13 new 52-week lows. This small population of new highs and new lows could be an early sign of sector rotation as investors begin to sell their popular winners and direct capital toward unpopular beaten up stocks.

One surprise was to see the popular Magna International Inc. (MG) posting a new 52-week low – but in reality not a surprise when you look at industry bellwether NYSE listed Autoation (AN) now trading below both the 50 and 200 day simple moving averages, Pile on the TSX listed AutoCanada (ACQ) and the message is clear – investors are running away from the auto related stocks. Another surprise was to see the dull material and industrial related Cascades Inc (CAS) and New Flyer Industries Inc (NFI) on the new 52-week high list. Packaging and buses? Are investors falling out of love with Alimentation Couche-Tard Inc and Dollarama Inc.?

Disclosure – I bought CAS last August when it appeared on the new 52-week high list and am still holding – someday I intend to find out what these guys do but then again – that is old news because stocks trade on what these guys will do – so I just follow the smart money


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