In this scan, we look to identify 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.
The underperformance from Technology stocks continues.
And keep in mind that you've been seeing it in Large-caps for most of this year, but you've been seeing the underperformance from Small-cap Technology for over 18 months.
Small-cap Tech peaked in the summer of 2023 relative to the rest of the small-caps:
It's really been a disappointment for Technology investors.
Granted, there are Tech stocks working, but they are few and far between, compared to what we have seen in the past.
Look at the returns of these Technology ETFs relative to the performance in Bitcoin over the past month:
So the question becomes: Is this fresh breakout the beginning of the next leg higher for equities?
Or is this market behavior evidence of exhaustion and it's time to get out?
Let me remind you of the "Fab 5" charts from the beginning of 2024 that helped determine whether we were starting a new leg higher this year or if it was time to bail.
It wasn't clear how the price would react to our target, but sure enough, the sellers showed up right on cue.
But the weight of the evidence continues to suggest this bull market has legs and it's better to spend our time looking for buying opportunities, not selling opportunities.
Let's talk about the recent price action and what it means for our portfolios:
I generally try to avoid that. Today's trade might be the simplest thing I do: follow a trend.
When a chart is going from the bottom left to the upper right, who am I to call a top in something like that? What kind of arrogance must I have to think I'm the one who can call the turn?
Let somebody else be the hero. I'm going to follow the trend until it ends.
Welcome back to Under the Hood, where we'll cover all the action for the two weeks ended November 8, 2024. This report is published bi-weekly, in rotation with The Minor Leaguers.
What we do here 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.