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4 Stocks Enjoying News-Free Rallies
Most of the time, news drives stocks up or down. Other times, if you look closely enough, a stock will start to move subtly in the absence of any news. The latter variety may actually be the more important rallies to watch for, since such clues often end up acting as a prediction of an announcement - and that's when the fireworks can really start. With that in mind, here are four names that have started to inch higher pretty convincingly of late, but without any particular reason (yet).
IN PICTURES: 6 Major Credit Card Mistakes
Double-Dip? What Double-Dip?
Despite remaining in its back-and-forth mode since April, Omega Healthcare Investors, Inc. (NYSE:OHI) has seen decided accumulation during this time. What kept OHI on the buy side of the table - and at least holding its value - while everything was falling apart? It sure wasn't news; what little there was would actually be more of a liability than an asset. The company issued $140 million worth of stock (dilution) to raise funds, and then dropped $270 million on new facilities - not to mention taking on an extra $180 million in debt in the process. The stock kept right on trucking though, with no other meaningful news to help the bulls.
I suspect the stock's resilience is rooted in being able to attract the right kind of investors - long-termers who aren't rattled by the short-term stuff, and long-termers who are confident enough in the projected 2011 P/E of 11.5 to remain patient.
Whatever the case, it's working. OHI is hitting new highs again, largely unfazed by external problems. Time to take the hint a few others already have.
Big News, Bigger Move
Prior to Friday, it wasn't clear why Applied Signal Technology, Inc. (Nasdaq:APSG) had managed to rally 9% over the span of about a month, and cross back above the important 200-day moving average line in the process.
As of Friday though, it makes sense. Applied Signal Technology was awarded an $11 million contract - which is pretty big for a company with a twelve-month top line of $210 million. Frankly though, the technical benefit - the momentum developed - of the move should end up proving more beneficial to current APSG owners than the $11 million will. In fact, the strength of the buying effort far exceeds the impact of the contract. There's something bigger going on here, and it seems like somebody knows it.
In The Know
Is the investment in Aurora Feint the real reason The9 Limited (Nasdaq:NCTY) shares have finally started to inch upward? Possibly, though the buying volume actually kicked into high gear in mid-June, before that news was even part of the rumor mill. Friday's outside bullish day - on the heels of the news - is more apt to be an indication that investors are now seeing the glass half full for this stock, even though it's close to 100% empty.
Considering this company isn't expected to turn a profit in 2010 or 2011, the new-found strength is more than a tad curious.
After a Year, Finally Catching On
I'd be kidding myself as well as you if I said I was a big fan of a stock that jumped 15% in a week like ADC Telecommunications, Inc. (Nasdaq:ADCT). I hate chasing those kinds of moves. I do, however, think it's interesting that the buyers kept stepping up to the plate between April and June each time ADCT dipped. Moreover, it's not like there was any directly-bullish news to inspire the bulls during this time.
I suspect that investors are finally catching on, after four consecutive quarterly EPS beats from ADC Telecommunications. With that kind of record, some speculative pre-earnings-announcement buying actually makes sense. Just be careful, as it's still overbought in the short run.
Bottom Line
Are these advances a guarantee that something big is on the way? Not in the least - that's a 'best case scenario' proposition. What's the worst case scenario here though? You own a stock that's being accumulated just because it's a stock that people want? Hey, there are worse things that could happen. (Learn more about a related topic in Riding The Momentum Investing Wave.)
Use the Investopedia Stock Simulator to trade the stocks mentioned in this stock analysis, risk free!
IN PICTURES: 6 Major Credit Card Mistakes
Double-Dip? What Double-Dip?
Despite remaining in its back-and-forth mode since April, Omega Healthcare Investors, Inc. (NYSE:OHI) has seen decided accumulation during this time. What kept OHI on the buy side of the table - and at least holding its value - while everything was falling apart? It sure wasn't news; what little there was would actually be more of a liability than an asset. The company issued $140 million worth of stock (dilution) to raise funds, and then dropped $270 million on new facilities - not to mention taking on an extra $180 million in debt in the process. The stock kept right on trucking though, with no other meaningful news to help the bulls.
I suspect the stock's resilience is rooted in being able to attract the right kind of investors - long-termers who aren't rattled by the short-term stuff, and long-termers who are confident enough in the projected 2011 P/E of 11.5 to remain patient.
Whatever the case, it's working. OHI is hitting new highs again, largely unfazed by external problems. Time to take the hint a few others already have.
Big News, Bigger Move
Prior to Friday, it wasn't clear why Applied Signal Technology, Inc. (Nasdaq:APSG) had managed to rally 9% over the span of about a month, and cross back above the important 200-day moving average line in the process.
In The Know
Is the investment in Aurora Feint the real reason The9 Limited (Nasdaq:NCTY) shares have finally started to inch upward? Possibly, though the buying volume actually kicked into high gear in mid-June, before that news was even part of the rumor mill. Friday's outside bullish day - on the heels of the news - is more apt to be an indication that investors are now seeing the glass half full for this stock, even though it's close to 100% empty.
Considering this company isn't expected to turn a profit in 2010 or 2011, the new-found strength is more than a tad curious.
After a Year, Finally Catching On
I'd be kidding myself as well as you if I said I was a big fan of a stock that jumped 15% in a week like ADC Telecommunications, Inc. (Nasdaq:ADCT). I hate chasing those kinds of moves. I do, however, think it's interesting that the buyers kept stepping up to the plate between April and June each time ADCT dipped. Moreover, it's not like there was any directly-bullish news to inspire the bulls during this time.
I suspect that investors are finally catching on, after four consecutive quarterly EPS beats from ADC Telecommunications. With that kind of record, some speculative pre-earnings-announcement buying actually makes sense. Just be careful, as it's still overbought in the short run.
Bottom Line
Are these advances a guarantee that something big is on the way? Not in the least - that's a 'best case scenario' proposition. What's the worst case scenario here though? You own a stock that's being accumulated just because it's a stock that people want? Hey, there are worse things that could happen. (Learn more about a related topic in Riding The Momentum Investing Wave.)
Use the Investopedia Stock Simulator to trade the stocks mentioned in this stock analysis, risk free!
by
James Brumley
James Brumley is a freelance writer and registered investment advisor. He began his career as a broker with a major Wall Street firm, where fundamentals and long-term holding periods were core strategies. After that, he switched gears completely, becoming an analyst at a short-term trading newsletter that focused on technical analysis. He now manages client money using the best of both philosophies. His company, Bluegrass Portfolio Management, offers investors an opportunity to reap superior returns with minimized risk.
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