BOSTON (TheStreet) -- The U.S. stock market has risen almost 10% so far in October, one of the best monthly performances in two decades. But investors in companies including Netflix (NFLX) and First Solar (FSLR) have been left out of the rally.Those are called momentum, or momo, stocks, which refers to companies that rise for intangible reasons, not for their fundamentals. Before this month, they outperformed the broader market since the March 2009 bottom. But as earnings growth expectations have been reined in due to fears of the debt crisis in Europe and a slowdown in emerging markets, some high-flier stocks have been decimated.
And, most recently, First Solar joined in the momentum collapse after the company said CEO Rob Gillette, hired less than three years ago to mark a new era in management of the largest solar company in the U.S., is leaving. Shares are down 28% this month after rallying more than 80% in the past five years. Not all momo stocks have been taken out behind the woodshed. Chipotle Mexican Grill ( CMG) is matching the market's 10% return this month after a stellar quarterly earnings report. LinkedIn ( LNKD), criticized as one of the new round of dot-com stocks set to collapse, also has jumped 10% in October. But as Jim Cramer noted on Real Money exactly one week ago, "It's not enough that stocks tend to trade together, the high-multiple stocks tend to trade in lockstep with each other." For investors in these high-fliers, that observation is tough to stomach. -- Written by Robert Holmes in Boston. >To contact the writer of this article, click here: Robert Holmes.
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