High-Momentum Growth Stocks Come Roaring Back Again
Key Takeaways
- Chasing bottoms in lagging stocks can be a fruitless move; what can be more beneficial is watching for pullbacks within top industries and taking the opportunity.
- While growth stocks struggled early in the week, they made some astounding gains by Friday.
- VELO and ATEX, the top names of EarningsBeats' momentum chartlists this week, show the potential of watching for weakness in leading groups.
At EarningsBeats.com, we are all about momentum and relative strength. We don't spend a lot of time trying to find bottoms in stocks that are badly lagging their peers and the benchmark S&P 500. Many times, that proves to be a case of throwing good money after bad.
What we do instead is provide our EB.com members with two momentum ChartLists at the beginning of each trading week. Despite the struggles of growth stocks early in the week, these returned to form by week's end and some of the weekly gains were astounding. Check out these leaders from our two momentum ChartLists:
Below are the top two performers from each ChartList:
VELO
VELO had retreated back into its gap support zone, while simultaneously testing its 50-day SMA and its rising trendline. From Tuesday's low, VELO doubled in 3 days, underscoring how quickly many of these high-momentum stocks move.
ATEX
ATEX is part of the red-hot telecom equipment group ($DJUSCT). Grabbing a stock like this off of a pullback and a 20-day EMA test can prove to be quite profitable, and ATEX was exactly that last week.
Note that both of these stocks came from industries that have been incredibly strong and have both have shown excellent relative strength among their peers. Leading stocks in leading industries are the key to investing/trading success, in my opinion. Find the leaders, wait on weakness to key support, and pounce!
On Monday, June 15th, in our FREE EB Digest newsletter, I'll be providing a stock that I believe fits this same profile. It's a leading stock in a strong industry group and I sense a big upside move coming. If you'd like to see a chart of the company, and you're not already a FREE EB Digest subscriber, you can CLICK HERE to sign up with your name and email address.
Happy trading!
Tom
