roller coaster

Thrill ride

Anyone owning stocks this summer has had no need of amusement parks to get their thrills.

On the up side, there is the Dow Jones Industrial Average (aka "The Dow") setting one new high after another and recently attaining the lofty 14000 level, taking only 2½ months to advance from 13000 to 14000. The normal advice to investors — sell in May and walk away — certainly hasn't applied this year; the DJIA has racked up half it's growth year-to-date since May 1.

On the down side, the market has been very volatile, soaring 150 points one day and falling 150 points the next. Individual stocks have been lurching around unpredictably, often reacting wildly to bits of news. Two quick examples:

TLAB 1-year chart

TLAB. Tellabs has been sidestepping across the chart for most of the past year, bouncing around in a channel between $10 and $11 dollars. After an April positive earnings surprise it looked like TLAB might break out, but analyst downgrades in early June sent it back down. Nevertheless, it crawled back up to make a new 52-week high. Yesterday, ahead of its earnings release, TLAB jumped 12% at the open for no apparent reason, but gave up most of that gain, ending the session up just 3%. Before the open today, TLAB announced earnings: profits fell 45% on softer sales and the company lowered its guidance for the following quarter. TLAB rose 4%.

CKR 1-year chart

CKR. CKE Restaurants (Carl's Jr, Hardees, and other chains) has been practically minting money for most of the past year, the stock rising steadily from $15 to $23 in June. After setting the latest 52-week high, it began a skid that has taken it from a "strong buy" to a "short candidate." Today, CKR reported same-store sales up 3.1% for the period, and 21 consecutive periods of positive sales growth for Hardees. Despite this good news, CKR stock was driven down almost 3.5% today.

There's just no explaining stuff like this. It is truly a Random Walk Down Wall Street (By Burton G. Malkiel, now in its 9th edition).