Don’t get too caught up in Fed watching this week because you may miss out on some great opportunities. After a couple of weeks of intense market action we’ve finally got a sense of normalcy. With this normalcy I’m seeing a lot of stocks regain strength and test their pre-existing 52-week highs. Buying into this strength is a great idea. If a stock can recover that quickly from a rough market, imagine how it will perform in bullish market conditions.
Some of the best trades I’ve made have occurred when I’m buying into strength. You have to be careful because you don’t want to be the last one in a crowded trade. But the good news about being late to the party is there’s only one chance for you to be wrong. It’s a lot less risky than trying to time a market reversal or picking a bottom.
A system that should work well is this market is picking top Zacks Rank #1 (Strong Buy) and Zacks Rank #2 (Buy) stocks that have Momentum Style Scores “A” or “B” that are at or very near 52-week highs. These stocks are leading the market out of the hole and could continue to break out to even higher levels as the market probes higher in search of a new value area.
Here I’ve come up with a list of the top five stocks that are lighting up my stock screen today.
Dave & Buster’s (PLAY - Snapshot Report)
Dave & Buster's is the leading owner and operator of high-volume venues that combine entertainment and dining in North America for both adults and families. Founded in 1982, the core of the concept is to offer guests the opportunity to “Eat Drink Play Watch®” all in one location. They offer a full menu of "Fun American New Gourmet" entrées and appetizers, a full selection of non-alcoholic and alcoholic beverages, and an extensive assortment of entertainment attractions centered around playing games and watching live sports and other televised events.
The weakness for PLAY began earlier in August than other stocks. Shares sold off from $40 all the way down below $32. That level provided lots of support as lots of volume had gone out there previously. The buyers stepped in to defend and a gap up earlier this month took this thing through the stratosphere. Gapping above the previous highs $50 is a statistical inevitability from here.
Equinix (EQIX - Analyst Report)
Equinix connects the world's leading businesses to their customers, employees and partners inside the world's most connected data centers in 33 markets across five continents. In the United States, Equinix operates data centers in Atlanta, Boston, Chicago, Dallas, Denver, Los Angeles, Miami, New York, Philadelphia, Seattle, Silicon Valley and Washington D.C.
A very rocky end of August had this stock on the ropes. Shares broke below the 21-day and 50-day, capitulating to a bottom near the June low at $250. An oversold Commodity Channel Index coaxed investors out of their shells and they rushed in to scoop up the deal. Just a few weeks later we’re sitting at fresh 52-week highs just shy of $300.
Dycom (DY - Analyst Report)
Dycom Industries, Inc. is a leading provider of specialty contracting services to the dynamic telecommunications and infrastructure industry. These services, which are provided throughout the United States and in Canada, include engineering, construction, maintenance and installation services to telecommunications providers, underground facility locating services to various utilities, including telecommunications providers, and other construction and maintenance services to electric and gas utilities and others.
Slow and steady wins the race here. Like the rest of the market, shares came down in late August to test support at $60. Luckily the buyers rushed in and picked up this oversold stock. Lately a surge in volume has accompanied a surge in the stock price. A very bullish occurrence that’s got me fired up about this one.
Jetblue Airways (JBLU - Analyst Report)
JetBlue Airways Corporation, or JetBlue, is New York’s Hometown Airline™. In 2013 JetBlue carried over 30 million passengers with an average of 800 daily flights and served 82 destinations in the United States, the Caribbean and Latin America.
JetBlue was incorporated in Delaware in August 1998, commenced service on February 11, 2000 and by the end of 2013 had grown to become the 5th largest passenger carrier in the U.S. based on revenue passenger miles.
Few stocks endured the volatility that JBLU dealt with at the end of August. At 52-week highs heading into the market trouble, shares slid from nearly $25 all the way below $17 intraday. Turns out that was the buying opportunity of the year as shares reversed to finish August 24th above $21. That seemed to be support as since then we’ve broken out to new highs above $26 with little overhead resistance.
Tech Data Corp (TECD - Analyst Report)
Tech Data Corporation is one of the world's largest wholesale distributors of technology products, services and solutions. Its advanced logistics capabilities and value added services enable 115,000 resellers to efficiently and cost effectively support the diverse technology needs of end users in more than 100 countries.
Amazing how a turnaround story can hold up throughout tough market conditions. Shares of TECD had been range bound for most of 2015, bouncing between $54 and $64. But an August selloff to retest the bottom of the range was met with bids that have since forced TECD shares through the top end of the range and on to fresh highs near $70. Volume has seen a bit of an uptick and the 21-day is positively sloped providing support down at $63.32.
Bottom Line
No one has a crystal ball and no single investment formula is going to be right all the time. But the way this market has been shaping up it looks like the winners will continue to be rewarded. Here I’ve given you five ideas of top momentum stocks that are on the move.
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