From the desk of Steve Strazza @Sstrazza.
Welcome to our "Under The Hood" column for the week ending November 20, 2020.
What we do is analyze the most popular stocks during the week and find opportunities to either join in and ride these momentum names higher, or fade the crowd and bet against them.
We use a variety of sources to generate the list of most popular names. There are so many new data sources available that all we need to do is organize and curate them in a way that shows us exactly what we want: A list of stocks that are seeing an unusual increase in investor interest.
Whether we're measuring increasing interest based on large institutional purchases, unusual options activity, or simply our proprietary lists of trending tickers... there is a lot of overlap.
The bottom line is there are a million ways to skin this cat. Relying on our entire arsenal of data makes us confident that we're producing the best list each week and gives us more optionality in terms of finding the most favorable trade setups for our clients.
The market continues to grind higher while offering us plenty of opportunities to profit in individual names. A lot of former Under The Hood stocks came back on our list this week.
Here it is. Let's dive right in.
Click table to enlarge view.
First is home speaker maker, Sonos $SONO.
The stock made a breakaway gap above key prior highs after reporting strong earnings and guidance this week. It also rallied to its highest level relative to the broader market on the news.
Sonos is now trading right back at its post-IPO all-time highs in the low 20's. It will likely need some time to digest its recent gains, but if/when price breaks back above its record closing highs ~21.75 we'd be looking for upside toward 31 over the next 3-6 months.
Next is Nuance Communications $NUAN which also gapped to new highs after reporting earnings this week.
This one isn't immediately actionable either as it may need some time to consolidate after a 20% gain this week. We'd only want to own Nuance on strength above 43. If/when that happens we'll be targeting 62 over a 3-6 month timeframe.
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