This Day On The Street
Continue to site
ADVERTISEMENT
This account is pending registration confirmation. Please click on the link within the confirmation email previously sent you to complete registration.
Need a new registration confirmation email? Click here

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.

However, there are still good trades in this tech-heavy arena, thanks to the leader-laggard dynamic that's common in big liquid indices. It goes like this: As the hottest components move higher, funds take profits, and that frees up cash for purchases in lesser-performing names. This rotation raises the odds that laggards will eventually catch fire and join their better-performing cousins.

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 - Get Report), O'Reilly Automotive (ORLY - Get Report) and Apollo Group (APOL - Get Report).



Hansen Natural (HANS) -- Daily
Source: eSignal

Hansen Natural is currently the 11th-worst performer in the Nasdaq-100 index. It sold off from $68 to $20 in the 2008 crash, bottoming out in October. It mounted the 200-day moving average in December and stalled two months later at $44. The subsequent pullback has been long-lasting, with price struggling to get back above the moving average.

1 of 3

Check Out Our Best Services for Investors

Action Alerts PLUS

Portfolio Manager Jim Cramer and Director of Research Jack Mohr reveal their investment tactics while giving advanced notice before every trade.

Product Features:
  • $2.5+ million portfolio
  • Large-cap and dividend focus
  • Intraday trade alerts from Cramer
Quant Ratings

Access the tool that DOMINATES the Russell 2000 and the S&P 500.

Product Features:
  • Buy, hold, or sell recommendations for over 4,300 stocks
  • Unlimited research reports on your favorite stocks
  • A custom stock screener
Stocks Under $10

David Peltier uncovers low dollar stocks with serious upside potential that are flying under Wall Street's radar.

Product Features:
  • Model portfolio
  • Stocks trading below $10
  • Intraday trade alerts
14-Days Free
Only $9.95
14-Days Free
To begin commenting right away, you can log in below using your Disqus, Facebook, Twitter, OpenID or Yahoo login credentials. Alternatively, you can post a comment as a "guest" just by entering an email address. Your use of the commenting tool is subject to multiple terms of service/use and privacy policies - see here for more details.
Submit an article to us!
SYM TRADE IT LAST %CHG
APOL $17.82 0.00%
GILD $101.38 0.00%
ORLY $214.05 0.00%
AAPL $124.75 0.00%
FB $80.78 0.00%

Markets

DOW 17,826.30 -279.47 -1.54%
S&P 500 2,081.18 -23.81 -1.13%
NASDAQ 4,931.8150 -75.9760 -1.52%

Partners Compare Online Brokers

Free Reports

Top Rated Stocks Top Rated Funds Top Rated ETFs