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Contextuall was founded on the belief that people’s online activities are a leading indicator of what they plan to do in the future. - Before you buy a car, you search for the best deals online - If you just lost your job, you tweet about it - If you’re visiting your local shopping mall, you... More
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  • Momentum Investing: The Top 3 Rallying Industries 0 comments
    Aug 28, 2012 2:24 PM | about stocks: AFAM, AMED, BBBY, CHE, CZZ, GTIV, HSY, HVT, PIR, RMCF, TR, WSM

    To identify high momentum industries, we collected the latest moving average data on more than 4100 stocks.

    For each stock, we calculated the current price relative to the 20-day (SMA20), 50-day (SMA50) and 200-day (SMA200) moving averages.

    After creating a pivot table on the data, we identified the industries that have the highest number of stocks currently trading above the 20-day, 50-day and 200-day moving averages.

    In other words, these industries have seen the majority of their members rally strongly over recent weeks.

    A more complete list of the top 20 best performing industries can be accessed here.

    High Momentum Industry #1: Confectioners

    4/4 stocks in the industry trading above the SMA20, SMA50 and SMA200

    Related Tickers: Cosan Ltd. (CZZ), Hershey Co. (HSY), Rocky Mountain Chocolate Factory Inc. (RMCF), Tootsie Roll Industries Inc. (TR)

    Investors seem to think that confectioners are immune to economic volatility. This is most evident, perhaps, when looking at Hershey's near-zero beta relative to the S&P500 index (i.e. uncorrelated to market returns). The relative stability of this industry has inspired the bulls, with all 4 industry members trading above their major moving averages.

    High Momentum Industry #2: Home Furnishing Stores

    5/6 stocks in the industry trading above the SMA20, SMA50 and SMA200

    Related Tickers: Bed Bath & Beyond Inc. (BBBY), Pier 1 Imports, Inc. (PIR), Williams-Sonoma Inc. (WSM), Haverty Furniture Companies Inc. (HVT)

    As we've mentioned before, our proprietary indices all indicate that the housing market is recovering, and this trend has also been confirmed by recent economic releases. This newfound optimism for housing's outlook seems to have benefited companies that provide home furnishing.

    High Momentum Industry #3: Home Health Care

    5/6 stocks in the industry trading above the SMA20, SMA50 and SMA200

    Related Tickers: Almost Family Inc. (AFAM), Amedisys Inc. (AMED), Chemed Corp. (CHE), Gentiva Health Services Inc. (GTIV)

    This appears to be a straightforward boomer play. The industry is attractive for many reasons: it isn't wildly volatile, doesn't have to worry about fixed costs and margins have remained steady during recent years. That said, changing government regulations could pose a threat over the coming months…

    Disclosure: I have no positions in any stocks mentioned, and no plans to initiate any positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it. I have no business relationship with any company whose stock is mentioned in this article.

    Themes: long-ideas Stocks: AFAM, AMED, BBBY, CHE, CZZ, GTIV, HSY, HVT, PIR, RMCF, TR, WSM
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