Burger stocks exploded last year. It started with the IPO of Shake Shack (SHAK) in January, an offering that was priced at 21, but began trading at 47. It was fueled by lots of hype about trendy private chains, like Five Guys, In-N-Out Burger, Whataburger, Umami Burger and Iron Chef Bobby Flay’s Bobby’s Burger Palace.
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Stocks and Investing
Today I want to write about one unique subset of indicators I track. These indicators don’t speak often … but when they do, they have a history of pointing to healthy gains in the months ahead. And one is speaking now. I call these “blastoff” indicators, and they’re meant to spot rare displays of power from the market in terms of breadth or volume.
Tesla stock is back on the rise thanks to its new Model 3 sedan, which is already a bigger seller than anyone expected.
One of the big stories this week was that the U.S. Treasury Department announced new rules that would limit companies' ability to participate in inversions. The new rules put the Pfizer (PFE) and Allergen (AGN) merger in peril. And I took an interest in this because I had an open position in PFE, owning call options (a bullish position) since January.
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To this point, not much has changed—the market still doesn’t have the leadership we’d like to see, but the trend is up and the broad market is in good shape.
Two weeks ago, I began highlighting that put buying was matching, or even outweighing, call buying—this is fairly rare in an up-trending market.
I would like to see a bit of a pause here before things get overheated. My sense is that we’ll get that pause next week. So don’t chase stocks that are rallying but haven’t reported anything to substantiate the move.
The EEM surged in mid-April and has now been trading sideways for a couple of weeks. Meanwhile, Chinese ADRs got a small bounce today that kept the PGJ above its 25-day moving average.
Over the last few weeks, we’ve seen a major rotation out of conservative, high-yielding equities, affecting telecoms, utilities, tobacco stocks and many consumer staples stocks.
Subscribers who followed my advice and became more aggressive value stock buyers in January were well rewarded.