As many of you know, something we’ve been working on internally is using various bottoms-up tools and scans to complement our top-down approach. It's really been working for us!
One way we’re doing this is by identifying the strongest growth stocks as they climb the market-cap ladder from small-, to mid-, to large-, and, ultimately to mega-cap status (over $200B).
Once they graduate from small-cap to mid-cap status (over $2B), they come on our radar. Likewise, when they surpass the roughly $30B mark, they roll off our list.
But the scan doesn’t just end there. We only want to look at the strongest growth industries in the market, as that is typically where these potential 50-baggers come from.
Some of the best performers in recent decades – stocks like Priceline, Amazon, Netflix, and Salesforce, to myriad others – would have been on this list at some point during their journey to becoming the market behemoths they are today.
When you look at the stocks in our table, you'll notice we're only focused on Technology and Growth industry groups such as Software, Semiconductors, Online Retail, Solar, etc.
Then, like any good technician, we filter the list down to those that are closest to new highs. This allows the cream of these strong groups to rise to the top and helps streamline our mission to identify technical breakouts in the top-performing stocks.
Growth, Tech, and the Nasdaq are starting to look tired as they chop sideways with potential bearish momentum divergences in place.
But, at the end of the day, it all comes back to price. And many of these Growth indexes just registered fresh all-time highs on Monday. Two down days do NOT make a trend.
And weakness from the index doesn't mean there aren't winners beneath the surface. There will always be nice long opportunities coming out of this universe. It's why we designed it the way we did. And it's why it's one of our favorite scans.
As for our overall position, it remains cautionary; evidence continues to be mixed, and we think markets are likely to remain a mess for the foreseeable future. But! These secular growth stocks are often the best when it comes to bucking the broader trend.
And, by the looks of our table below, plenty of names are still trading at or near fresh highs and showing impressive relative strength. Here's a look at this week's list:
As usual, we’ve sorted it by proximity to all-time highs. As such, all of these stocks are exhibiting the kind of strength characteristic of future leadership.
Let's dive right in and discuss some of our favorite long setups!
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