Tuesday's 2.3% rally in the S&P/ASX 200 (Index: ^AXJO) (ASX: XJO) was an epic performance considering the selling pressure the market faced on Monday.
Interestingly, the buying was broad based with a wide range of index constituents leading the market higher; although the banks certainly did their share of the heavy lifting too.
Also of interest was just how large the gains were amongst the top ten gainers with even the tenth largest gainer, Seven West Media Ltd (ASX: SWM), recording a rise of 5.9%.
These were the top five performers:
- Greencross Limited (ASX: GXL) soared 9.6% to $6.30 – no specific news
- Origin Energy Ltd (ASX: ORG) leapt 7.4% to $5.15 – despite a fall in the oil price
- Seven Group Holdings Ltd (ASX: SVW) added 7.3% to $5.15 – no specific news
- Slater & Gordon Limited (ASX: SGH) jumped 7.1% to $3.00 – no specific news
- Mayne Pharma Group Ltd (ASX: MYX) climbed 6.7% to $1.12 – no specific news
With Wall Street closing flat overnight, the ASX could be set to take a breather today. One exception may be commodity stocks with iron ore and oil both falling over 2%. This could mean Origin Energy gives up some of yesterday's gains.
Interestingly of the five stocks which experienced the strongest gains yesterday, four of them – the exception is Mayne Pharma – have been heavily out of favour and all had experienced share price declines of over 20% in the past six months.
The jump higher is a reminder that heavily sold down stocks can rally quickly off of their lows. Heightened volatility can create buying opportunities for investors, however it's important to act quickly as bargains don't hang around too long.
