New Stock Highs? Don't Lose the Plot!

During August, Mr. Market was in the doldrums, and the S&P 500 came within spitting distance of its 2010 low. In September, Mr. Market went back to the office reinvigorated, with the index continuing to rally strongly today ... just as gold breaks $1,300 for an(other) all-time nominal high! What an odd set of phenomena!

Looking at the list of stocks hitting their 52-week highs this week, it's tough to see a theme. There are some high-quality companies such as Apple (Nasdaq: AAPL  ) and Netflix (Nasdaq: NFLX  ) . What will it take to halt those juggernauts? But there are also companies that are leveraged (Las Vegas Sands (NYSE: LVS  ) ) or speculative (Nxstage Medical (Nasdaq: NXTM  ) , Savient Pharmaceuticals (Nasdaq: SVNT  ) ). With gold at new highs, one would expect to see one or more gold miners on the list, and there are several (though none of the big players). The best-represented sectors among the U.S. stocks at 52-week highs? Health care and technology.

Across the ocean, there's something else that made new highs this week -- Ireland's borrowing cost and the cost to insure Irish debt. Meanwhile, it turns out that the €440 billion European Financial Stability Facility -- part of the huge emergency package put in place to halt Europe's sovereign debt crisis -- is smaller than the headline number that the EU trumpeted in May.

It occurs to me that it was only a few months back that the same debt crisis finally broke the U.S. market's extraordinary rally, begun in March 2009. Commenting on the crisis on May 1, Warren Buffett said: "I don't know how this movie is going to end." Neither do I, but it appears the U.S. viewer-participants have already forgotten the opening scenes.

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Nxstage Medical is a Motley Fool Rule Breakers choice. Apple and Netflix are Motley Fool Stock Advisor recommendations. The Fool owns shares of Apple. Try any of our Foolish newsletter services free for 30 days.

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  • Report this Comment On September 25, 2010, at 6:20 AM, Henry3Dogg wrote:

    If shares are ar an all time high and gold is at an all time high, isn't the obvious interpretation a drop in the value of money. Governments cook the official numbers, but the market is giving it's own opinion.

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