As The Fly pointed out earlier in iBankCoin’s Financial News slot with a screen snippet of The PPT algorithm, mattress stocks are taking it on the chin today. Over the past few years, SCSS and TPX have been momentum winners to the upside. It may sound like a bizarre bull market for hot money players, but mattresses have apparently been selling like, well, people need somewhere to sleep with a modicum of comfort.
Turning to the weekly charts of these two mattress standouts, you can see that heavy selling is accompanying the recent price weakness. After a prior steep uptrend especially, this type of action should scream, “distribution” to you, as the larger market players look to unload their shares to smaller traders. Now, the market does not always make things so easy, which means that distribution does not always equal a top. Besides, forming a top can be a painful and tedious process that frustrates everyone before the eventual roll over. What it does mean is that when you see this type of heavy selling for prior momentum favorites you would be remiss to press your luck as a long for anything more than a quick oversold bounce, if that.
Even with this type of distribution, the mattress stocks (and quite a few other momentum winners) can still go higher in the coming weeks, they just need wings to do so on their own. Are you willing to bet on that?
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