The market continues to perform quite well with the DJIA leading the charge to the upside today. The DJIA is leading with a gain of 0.8%, while the Russell 2000 ETF is lagging with a gain of 0.2%. Breadth is good, but not spectacular, with 4200 gainers to 3000 decliners. There are around 225 new 12-month highs.
What is most notable today are the pockets of strong speculative action. The FATMAAN names are mixed and breadth could be better but the momentum in many names is quite impressive. Some of the stocks I've discussed recently such as Pacific Ethanol (PEIX) , Big 5 Sporting Goods (BGFV) , and Dada Nexus (DADA) are good examples. They are becoming extended but the momentum is strong and the challenge is to stay with them as long as possible. I've made some partial sales but will maintain core positions.
While I'm managing positions I'm also looking for some new buys and have added two.
First is Yalla Group (YALA), which is a recent IPO that offers social media in the Middle East and North Africa. It has a unique 'voice-centric' social network. Financial results before the IPO appear to be quite strong with revenue growth nearly doubling in the six months ended June 30, 2020, and operating profit of around $25 million in the same period.
A second name I'm looking at is Gogo, Inc. (GOGO) . The chart here is quite attractive. The company sold its commercial aviation WIFI business to Intelsat (INTEQ) for $400 million in August and is now focused on the much more lucrative private aviation sector. The company has a big NOL to use and has announced some recent contract wins.
This has been a great market for stock pickers and continues to offer some interesting opportunities. Many stocks did need some rest but with earnings season kicking off in earnest next week there should be a continuous crop of opportunities.
