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.
From the Desk of Steve Strazza @Sstrazza and Alfonso Depablos @AlfCharts
Stocks are back in bear market rally mode for the second time since this summer!
Whether this is the beginning of a new bull market is something we can only know in hindsight.
Fortunately, defining the current rally appropriately is not a prerequisite for participating in it. And the latter is all we’re worried about.
We want to position ourselves in the strongest stocks from the strongest groups and use them as vehicles to benefit from the counter-trend move that's underway.
We discussed this in more detail on today’s Strategy Session. Click here to review the recording and the chartbook.
Now, let’s dive in and check out some of our favorite setups from our Inside Scoop universe.
We retired our "Five Bull Market Barometers" in 2020 to make room for a new weekly post that's focused on the three most important charts for the week ahead.
This is that post, so let's jump into this week's edition.
This week we're looking at the stock from the capital goods sector. Stocks from his sector continue to show strength in a consolidation type of market setup.
Many stocks are no where near their all-time highs.
The S&P500 still needs to rally 25% just to get back to its former highs. And that's after the 10% rally that we've already seen in October.
The Nasdaq100 would need to go up another 43% from here just to get back to its highs. And again, that's after it already ripped 12% off its lows this month.
Remember, the average Nasdaq stock fell 44% from its highs during the bear market. The average small & micro cap stock dropped about 50%.
And since most stocks are so far from their highs, investors are having a hard time calling this a bull market.
"They need to make new all-time highs for it to be a bull market", they say to me.
So ok, let's play that game.
None of these prices here below were new all-time highs. So was this a bear market then?
