For Immediate Release
Chicago, IL – October 12 – Zacks highlights commentary from People and Picks Trader “JohntheWizard”.
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Expect No Year-End Rally But a Consolidation Around Current Levels Until February
How do Zacks Rank #1 small caps lead the direction of the market today?
Since the beginning of August, the 4 best ZR1’s made 37%, the S&P500 6.2%. During the 13 weeks preceding last August, the best 4 ZR1’s were consolidating in a trading range.
From 2007 onwards, every fifth week into the even quarters, these 4 ZR1’s started a consolidation period of 13 weeks. In line with this history, after another two weeks, these ZR1’s may start trading in a range again for 13 weeks. My new collection of best 24 ZR1’s is given under tags with 9 new stocks.
Last week, Alcoa (AA) kicked off the new reporting season with mixed y-o-y signals: higher quarterly sales, smaller quarterly net income, higher debt and decreasing cash. Usually that picture will generalize throughout this reporting season.
We closed last quarter with all-time high trailing-year sales and net income for the consumer sector. We saw record high 20% y-o-y quarterly sales growths and 200% EPS growths for the five combined Industry Sectors Auto-Tires-Trucks, Basic Materials (Alcoa), Industrial Products, Computer-Technology, and Oils-Energy. DURING THAT SECOND QUARTER, the market “anticipated” that strong fundamental growth with a -10% fall in Market Cap/share for these five combined sectors.
Hence, when history repeats itself, after the strong performance of the best ZR1’s and the S&P 500 since last August, I expect no year-end rally but a consolidation around current levels until the end of next January.
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