The Blackmores Limited share price is surging ahead of its quarterly update

The Blackmores Limited (ASX: BKL) share price has surged 15 per cent higher over the past month, despite the vitamin king releasing no price sensitive news to the market.

Blackmores should release a highly-anticipated sales update for the quarter ending September 30 2017 at the end of October and it seems some investors are confident it will be a strong update given the recent share price climbs.

Professional investors in the retail space commonly track all sales data across Blackmores’ key distributors in order to try and get an edge on the market and may believe vitamin sales have performed well.

Technical traders may also buy or sell shares on the basis of momentum indicators such as fixed-period moving averages or relative strength indices, all of which can exaggerate short-term share price movements.

Elsewhere, baby formula business Bellamy’s Australia Ltd (ASX: BAL) today announced a big upgrade to its FY 2018 revenue guidance after its share price had also surged in recent weeks on seemingly no news.

It has been accused in the media of running a “leaky ship” as it seems the share price action foreshadowed today’s positive trading update that should have come as a surprise to investors.

For serious investors the only thing that really counts is how Blackmores’ sales have actually performed for the quarter ending September 2017 and what the group expects for the remainder of the financial year.

In order to justify today’s valuation the group will need to deliver a relatively strong trading update. As an investor, I’d rate the stock as a hold for now and continue to like its long-term prospects.

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Motley Fool contributor Tom Richardson owns shares of Blackmores Limited.

You can find Tom on Twitter @tommyr345

The Motley Fool Australia owns shares of Blackmores Limited. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.

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