Weekly Update: The Stocks Leading the Market
Good evening, and welcome to this week’s edition of Stealth Trades!
Market leaders. Every bull market cycle has them. These are the top stocks being bought heavily and steadily by institutional investors.
Every bull market of the past three decades has had a theme to it. And within that theme are 5-10 stocks that lead the market.
In the late 90’s it was the Dot-Com boom when names like Yahoo and Cisco soared.
In the 2010s it was big tech and the FANG stocks that became household names.
In 2020 and 2021 the theme was Work-From-Home. Stocks like Peloton, Zoom and Teladoc skyrocketed when people could no longer go to the gym or doctor’s office.
And the 2023-2024 bull market was no doubt focused on AI. Nvidia was the clear market leader along with SuperMicro and others.
Following a vicious 2-month bear market following Trump’s international trade war, we are in the early stages of another bull market. And it is crucial that we identify leadership early and do our best to get positioned quickly.
There is no hard formula for identifying market leaders, but they have several things in common…
First, they will be “institutional grade” stocks. This means a market cap of at least $10 billion and typically a high share price.
These stocks will also be the first ones to make new highs – long before the indexes fully recover.
Notice how Peloton (PTON) ripped off the lows after the 2020 COVID crash:
It made new all-time highs months before the rest of the market caught up. PTON went on to run another 336% over the next six months.
It was the same with Nvidia in 2022. The stock made new highs in January – a full four months before the Nasdaq index was back to its previous levels.
NVDA gained more than 1,000% over the next two years.
Identifying market leadership early and hitching your wagon to these stocks is one of the best ways to outperform the market.
So, what stocks are leading today?
My current list is 8 stocks. These could change, so don’t send me hate mail in a year if one of these does not perform. But all 8 of these stocks are showing clear signs of leadership.
Spotify (SPOT)
As you can see in the chart above, Spotify is already pressing against new highs. It is also forming a nice consolidation pattern and looks ripe for another move higher.
Roblox (RBLX)
Roblox is up over 60% in the last six weeks. It is making new highs before most other large-cap names.
RBLX is also a young company. It has only been publicly traded since 2021. And all things being equal, recent IPOs should always be favored over older stocks.
It is also in the early phase of its first Stage 2 breakout (see weekly chart below).
If you’ve been to one of the live sessions I hold Monday mornings, you know how profitable this window can be. The trade war was just a blip on the radar for this stock, and I wouldn’t be surprised to see it double from here.
Rubrik (RBRK)
Rubrik is another young player and one you may have never heard of. That’s a good thing and exactly when you want to be buying.
This cybersecurity company went public a year ago and has been on a tear ever since.
It is up 78% in a month and a half. Volume is increasing. And it made new all-time highs on each of the last four trading days.
Don’t sleep on this one. It has all the signs of a top performer.
ServiceTitan (TTAN)
Everything I said about Rubrik can also be said about this stock.
Young IPO… big momentum… little-known name… ripping to new highs early…
Many market leaders were not household names when they started their big moves. No one knew anything about SuperMicro Computers, Teladoc, or Monster Beverage when they started moving. But that didn’t stop them from climbing thousands of percent each.
TTAN was making new highs at the same time the market was making new lows! The last stocks I saw do that were Peloton and Zoom in 2020 (both market leaders of that cycle).
A few other leaders emerging are GE Vernova (GEV), Palantir (PLTR), Robinhood (HOOD) and Bitcoin (IBIT).
For the sake of not turning an email into an essay, I will simply include charts of each below.
Don’t feel the need to chase these potential leaders. I am not telling you to blindly buy all 8 on Monday (although you’d probably still outperform the market that way).
What I want to see are clean setups in these stocks – either breakout patterns or controlled pullbacks – and then to hold them as long as possible.
True market leaders will offer several buying opportunities throughout their run. My goal is to add in at each of these points – building larger and larger positions in the best-performing stocks.
Imagine having a big chunk of your account in Nivida over the last two years. Even a 10% allocation would have doubled your entire account!
This is how the big money is made. Focus on the leaders, wait patiently for good entry points, then go in with conviction.
It is easier said than done. But get it right, and the rewards can be astronomical.
Best wishes for your trading,
