How To Easily Find The Next Leading Stocks After A Market Correction

When stocks are finding a bottom after a correction, buying the right stocks is crucial. Here’s a simple technique known as Relative Strength that enabled us to identify and buy NET before it rallied to a +46% gain in our portfolio (in less than two weeks).

During the recent, intermediate-term correction in the stock market, the Nasdaq Composite and S&P 500 both pulled back approx. 11-12% off their highs.

Since top growth stocks outperform on the way up, they also typically retrace two to three times more than the major indices during a market correction (20-30%).

When corrections begin, we prefer to take profits in extended stocks and wait for new bases to form.

This is preferable to sitting through a potentially sharp pullback that could cause our positions to give back 50-75% of our gains.

But the real question is how do we know when to get back into the market…and exactly what to buy?

Continue reading to find out how a simple technique known as relative strength helps you easily identify new, emerging leadership when the major indices are forming a bottom after a correction.

Cloudflare (NET)

+46% gain in less than two weeks

When stocks recently began finding an intermediate-term bottom, the clear relative strength of Cloudflare (NET) grabbed our attention as a potential buy setup.

While the S&P 500 and Nasdaq were still well below their 50-day moving averages and trending lower, NET reclaimed key support of its 50-day MA on September 21.

Cloudflare had also formed a “higher low” well ahead of the main stock market indexes.

The chart below shows the relative strength that NET began showing before it blasted nearly 50% higher:

When a stock is already trending higher as the major indices are sideways to lower, this is what we mean by relative strength (not to be confused with the RSI indicator).

If a stock has so much relative strength that it trends higher even while the broad market is not, guess what happens when the major indices eventually rally as well?

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Disclaimer: Past results are not necessarily indicative of future results. There is a high degree of risk for substantial losses in trading securities. All data and material on this website ...

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