Why Now Is the Time to Identify the ‘Frontrunners’
I want to share something special I’ve been working on…
It involves a class of stocks I’ve dubbed “frontrunners,” and how they could be a saving grace in this volatile, unpredictable environment.
This past week saw everything from negative earnings reports and lowered guidance in once-stalwart chipmakers Nvidia Corp. (Nasdaq: NVDA) and Micron Technology Inc. (Nasdaq: MU), to positive data indicating inflation may have peaked.
While the stock market ended the week strong, it could be a case of too much too soon, meaning there could be a pullback on the horizon…
That’s why I’ve been focused on identifying frontrunners, stocks that are capable of providing opportunities despite the broader market sell-offs we’ve experienced.
Frontrunners tend to move up in short bursts over the course of 60 days or less.
They do so with no advance warning, and often with no catalyst or trigger pushing them higher.
And as impressive as frontrunners are on their own, the real magic comes from using them in trade clusters...
For example, if defensive stocks are on the way up, you could initiate positions in several defensive names to diversify and spread out your risk.
Now let’s say market conditions begin to change and tech stocks start to exhibit strength. You could choose to increase exposure to the sector and decrease exposure to defensive stocks.
The most important thing to keep in mind is that clusters allow you to pick the best combinations of stocks with the most resilience in current market conditions.
Now that we’ve talked about the power of frontrunners, how do we identify them?
Follow the Money
There are a variety of factors working in tandem that can cause some stocks to trend higher while the rest of the market is melting down.
To identify frontrunners, we screen for 10 factors, including market timing, sentiment, volatility and relative strength.
But there’s one in particular I pay close attention to…
Volume!
Volume is hands down one of the most important factors when it comes to determining the probability a stock’s price is about to jump.
About 78% of stocks that see a big rise in volume without any news or reports related to fundamentals also go through a big change in price within two trading days of the volume spike.
So how much volume qualifies as “big”?
The study responsible for this statistic required an increase in volume of at least 75% over the average of the five previous trading days.
So if a stock’s daily volume is around 1 million shares, you would look for a spike of 1.75 million.
And remember, volume is just one of the 10 factors I look for when identifying frontrunners.
We’ve experienced a lot of turbulence in the market this year. Now more than ever, it’s time to restructure our portfolios, cut the dead weight and refocus our investment strategy around the stocks with the best potential — the frontrunners!
I not only covered how to identify frontrunners, but also how to use them to create trade clusters, and the powerful effects they can have when assembled into an entire portfolio.
I just went live to reveal my No. 1 Frontrunner Stock for the rest of 2022…
Not only that, but I also discussed the core factors behind what I call “Frontrunner Stocks,” how to build your own custom ETF, portfolio management and more!
I even went into great detail on the formula used to backtest the Frontrunner Portfolio, and shared the results!
*Stated results are typical for given period. Past performance is not indicative of any future results. Trade at your own risk. From 5/23/22 to 7/12/22 on live trades the average win rate is 100%, the average return is 15.3% over a 3 day average hold time.
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