Four Stocks for the Next Rotation
The Nasdaq-100 index has outperformed the S&P 500 and most other market indices throughout the six-month rally. Therein lies the challenge for traders and investors who are looking to get on board this fast-moving train. In other words, the index has ramped up so quickly, and without pullbacks, that it's hard to find bargains within its 100 components.
To find these potential winners, I sorted index components by their relative positions, vis-a-vis the 200-day moving average. Index leadership tends to float to the top of this performance list, while laggards drop to the bottom. Then I examined price patterns of the bottom-dwellers, looking for accumulation, growing interest and evolving uptrends.
Four stocks stood out in my chart review as prime candidates for rotational cash as market players take profits in the index leadership and go hunting for new winners. These potential beneficiaries are Hansen Natural (HANS), Gilead Sciences (GILD), O'Reilly Automotive (ORLY) and Apollo Group (APOL).
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