Finding Stocks that Will Soar During the Next Uptrend
As the market peaks and goes into a correction, the big question traders and investors should ask is “which stocks will lead the market during the next bull market?”
When the market starts a new up-trend, a handful of stocks make huge gains and become the big winners over the next few months to few years. And what most people do not realize is that these stocks normally behave a certain way during the market correction preceding the big run.
Most growth stocks pull back sharply during a market correction. Over the past few years we have seen the market go down about 10% – 20% or more from top to bottom during corrections. But most growth stocks have gone down much more.
Some have corrected 30% or more from top to bottom. Stocks like DDD which we made a bearish call in 2014 in the Daily Alert before it dropped more than 30% within a couple weeks.
But a few drop far less than this and have what technicians call well-formed consolidations.
A couple recent examples in late 2018 are PAYC and NOW. Those trend trading need to keep those top growth stocks that are in strong consolidations despite a market pullback on their radar.
Now a lot depends on the fundamentals and whether they continue to improve or not but these stocks are well positioned from a technical standpoint to do very well when the market starts the next sustained rally. And both PAYC and NOW had recent large earnings beats which was another good sign before we featured them in the Daily Alert.
So make sure your watch list is full of quality growth stocks and watch how they consolidate and pull back during the correction. The ones that fall more than 2.5 times the pullback of the overall market averages are more suspect.
While the ones that fall less than that and close the weeks during the correction strongly are more likely to lead the market higher. This is counter-intuitive to some but the top quality growth stocks that fall more tend to under perform the ones that fall less.
We generally only have 3 to 5 long-term holds in our portfolio and one of these has continued to go higher during a recent pullback. This is an even better sign.
In our Daily Alert we are constantly on the lookout for stocks that are holding up well in good technical formations during a market correction. And then we feature them as they near an ideal technical entry point. An effective trend trading strategy.
These stocks are often among the big winners in the next market uptrend. Hope that helps.