From the desk of Steve Strazza @Sstrazza
Welcome to the 2 to 100 Club.
As many of you know, something we've been working on internally is using various bottom-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, Salesforce, and 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 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.
While the broader market comes under increasing pressure, we continue to see strong rotation away from growth stocks.
With growth stocks out of favor, it is obviously a difficult environment for the average 2-to-100 Club member. While we want to embrace corrective phases as they make the real leaders stand out that much more, we also want to be cautious amid the recent volatility.
Long story short, it’s not the time to press longs.
As usual, we’ve sorted this week’s list by proximity to all-time highs.
Here it is:
When the selling pressure alleviates for growth stocks, these should be some of the first names trading back at fresh highs.
Until then, we want to pick our spots selectively.
Now let's dive in and discuss some of our favorite long setups!
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