When the general market weakens, it's a great time to see what
stocks are really strong. Which stocks show relative strength and
are unwilling to come back in? Creating a list of those stocks and
monitoring them for entry points is a time-tested way of finding
the strongest stocks to invest in for whatever time frame you have
an interest in. In the case of this article, that was the
short-term time frame since that's the only place we have seen
weakness for quite a while.
To locate the stocks that show the best relative strength
currently, I took the recent period of decline in the general
markets (from the closing price on August 14 to the closing price
on August 21) and searched for those stocks that showed gains
during that period when the market was selling off.
I further refined the list to include only those stocks traded on
US exchanges, which had mean-time-to-failure rates for both the
short term and intermediate term that were less than 50% and whose
qualified trends where either suspect or confirmed bullish.
Finally, I narrowed it one more time to only look at those stocks
where both earnings and revenues were double digits. You can
find the full list here
. It is a comma separation spreadsheet that you can download and
Stocks With Strength
) blew away earnings expectations and continues to be revalued as a
result. The chart reveals the need for institutions and funds to
just keep on buying this stock for now.
Information Services Group
) isn't exactly a household name, but if household names were based
on chart behavior, it would be. The company announced earnings on
August 6 and it's been a one-way move ever since. The first retrace
would be a nice opportunity to step into this name.
Krispy Kreme Doughnuts
), on the other hand, for better or for worse, is a household name,
given our love for sweets. With the pickup in office meetings
treats and a bit more loose change for Saturday morning runs, the
result is a stock that just keeps building a nice steady pattern
On the technology front,
) has some good inroads in the Chinese market, and the stock is
benefitting greatly from it. It doesn't hurt that the company plays
in one of the fastest growing spaces: mobile.
When the general markets go up, everything looks good. When they
weaken, though, that's when you can start to pick out the real
winners. In this case, I'm looking at the short-term time frame and
saying what companies refuse to sell off, exhibit great growth and
revenues, and have qualified trends that are relatively young and
thus should last for a while. It's not a bad place to look for new