How to Find the 10 Strongest Leading Stocks
Dear Fellow Investor,
If you’ve been reading my Cabot Wealth Advisories lately, you know I have one strong belief—stocks are now in a powerful bull market that, in all likelihood, will carry them much higher throughout the year.
I say this not as yet another pundit that likes to make predictions (actually, I am mostly against predictions when it comes to the market). I say this because of numerous historical market studies that point toward higher prices down the road.
For instance, right after the market’s late-November lows in 2012, the 10-day moving average of advancing stocks vs. declining stocks moved quickly from oversold to overbought. That’s only happened 14 other times in history, and nearly all of them were major buy points. One year later from these signals, the S&P 500 was up nearly 24% on average!
Then came the Fiscal Cliff resolution at the start of the year. Investors were worried sick about across-the-board tax hikes, and the result of the deal created a massive two-day buying stampede—on each day, in fact, 90% of the volume flowed into stocks that were up. That’s only happened six other times since 1950 (!), and the market was up an average of 19% one year later.
Even more recently, in early May, we saw another advance/decline-related indictor get to a dramatically overbought level. Again, the signal is very rare (just 13 occurrences since 1940), and the market was up nicely one year later all but one of those signals.
There are other market timing studies (many of them more complicated) that all say one thing—the smooth uptrend so far in 2013 is something of a “blast-off” that is going to lead to higher prices. Going along with this has been the stupendous action in leading stocks (more on that in a minute).
So the question becomes, “What’s the best way I can take advantage of the bull market?”
Certainly mutual funds and exchange-traded funds should do decently; dividend stocks will also ride the trend higher and pay you a few dimes as well.
But let’s face it—neither funds nor slow-moving dividend stocks are really going to increase your wealth ... they’re not going to change your life for the better. If you want to make big money, you have to invest in the real leading stocks of this advance—the ones that the Fidelitys, the T. Rowe Prices and the Vanguards of this world are accumulating week after week, month after month.
Why are these institutional investors piling into these stocks?
Because the real leaders are the ones with unique, new and potentially revolutionary products and services ... things that are even changing the way we work and live. These are the things usually causing enormous sales and earnings growth, and which cause analysts and money managers to constantly up their outlooks. While many stocks go up in a bull market, it’s the real leaders that put on the best show.
Most individual investors (and many professionals, too) lack the means to discover the leaders; they’re forced to read generic magazines or listen to CNBC, whose main purpose is entertainment. By the time the average Joe hears about a real leader, it’s likely most of the way through its run!
That’s where Cabot Top Ten Trader comes into play: It’s the #1 source of new, leading stock ideas for investors.
Granted, I am a bit biased—after all, I’m the editor! But I can tell you in all honesty Top Ten Trader has greatly improved my own trading since we launched it 10 years ago, and it’s done the same for thousands of subscribers, too.
It’s done this based on our proprietary OptiMo screen (it stands for optimum momentum). Every week, it looks for stocks in major longer-term uptrends ... as well as names that are showing outstanding accumulation in recent days and weeks. I then ferret out the names with the best stories and highest potential.
The result: The 10 strongest leading stocks in the market.
But I don’t just drop a list of stocks in your lap and let you figure out the rest. I also tell you why the stock is strong—not boilerplate stuff, but why the stock is under such strong accumulation, and why it should continue. And I analyze the chart, giving you a buy range for every name. Last but not least, I provide follow-up so you know when to get out.
The bottom line is that subscribers of Cabot Top Ten Trader are guaranteed to be fishing in an ocean of stocks that the big institutional investors are buying hand over fist.
Time after time, I’ve seen our Top Ten Trader recommendations pop significantly higher in the weeks and months following their appearances. Many times these pops have to do with news (especially earnings reports), but often it’s simply big investors piling into situations where there simply aren’t many potential sellers.
The result: Quick and often steady gains in the weeks that follow.
A perfect example of this is Celgene (CELG), which might be a bigger-cap stock, but my system found it in early February when it was trading in the mid-90s. By early May it was north of 130 with no significant pullbacks along the way!
Another example—Netflix (NFLX) was left for dead by many investors, but the stock zoomed earlier this year and formed a great set-up by late-January. The stock was up 50% within a couple of months and still looks great!
However the specialty of our system really comes in smaller, lesser-well-known stocks. Zillow (Z) showed up in Cabot Top Ten Trader in early April around 50. It was up 25% within a month!
ServiceNow (NOW) was recommended in mid-March as it etched a beautiful base. The stock had many quarters in a row of 90%-plus sales growth as its Cloud software was like catnip to big IT departments. A month later the stock exploded on earnings, up more than 20% in a month!
Finally, Cheniere Energy (LNG) is going to be a big-cap stock one day, as it’s building huge liquid natural gas exporting facilities that will come on-line in about a year. But the stock is discouting that great future now, rising more than 50% from February (when it appeared in Cabot Top Ten Trader) through early May!
These are a few winners, and I expect dozens more as 2013 progresses.
Why? Because it’s a bull market! And after more than a decade of back-and-forth action, most investors don’t remember what a bull market looks like, how it acts and how it persists. But we do! And 2013 is one, which will stretch many stocks far higher than most believe.
Again, as I explained above, there is overwhelming evidence that this market is headed much higher in the weeks and months to come, and I’m seeing continued evidence of institutional support (they’re buying the best names during this weakness), telling me these big investors are expecting more upside surprises to come.
So don’t hesitate… Act Now!
Editor of Cabot Top Ten Trader
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