As most of you know, we use 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.
Here is this week's list sorted by distance from 52-week highs:
*Click to enlarge view
All of the stocks in this table are currently at new highs, which is not something we usually see. The bottom line is it's bullish.
It speaks to investors moving out on the risk curve and bidding up some of the more speculative names in the market.
Let's dive in and discuss some of our favorite setups!
Our first setup is the $14B retail brokerage, Robinhood Markets $HOOD:
Robinhood Markets is in the process of completing a multi-year reversal pattern after suffering a 90% drawdown immediately following its IPO in late 2021.
The anchored VWAP from the all-time high (blue line) coincides with the breakout level, reinforcing the importance of this resistance zone.
On a relative basis, HOOD is pressing against the upper bounds of a similar reversal pattern versus the broader market. A bullish resolution in the relative trend is the best confirmation we could get for the breakout on absolute terms. We're looking for this one to outperform more in the future.
We want to buy HOOD on strength above 16.50, with a target of 34.50 over the coming 3-6 months. We can also enter on weakness back toward the pivot highs around 13.
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