April will go down as one of the most volatile months in stock market history.
At the lows a few weeks ago, the S&P 500 was in a 20% drawdown. Fast forward to today, and after finding support at the prior cycle highs, the index has already rallied 17% off the bottom.
They call it a fast market. There's no doubt about that.
But more importantly, it's starting to feel like a bull market again.
The major averages reclaimed their VWAPs from the all-time highs earlier this week, and now we're seeing bullish follow-through.
As long as these moves stick, it's looking more and more like a V-shaped recovery out here. And that means it's time to get more aggressive.
Throughout this correction and subsequent rally, we’ve been closely monitoring the tape and scanning for stocks that are bucking the trend and showing outperformance. We typically use relative strength and momentum to identify these leaders.
Today, I want to share one of our internal scans and my favorite trades from it.
Here's an updated look at our bullish momentum regime scan:
What we did here is take all the tickers in the S&P 500 that stayed out of oversold territory during the recent volatility and then sort them by their performance off the recent lows.
This simple criteria accomplishes two very important things.
The first is that these stocks all showed resilience through the selling pressure in March and April. We know this because they avoided oversold readings which the majority of stocks and indexes could not do.
The second is that they have been excellent performers recently, showing strength and momentum off the lows.
So what we have is a list of stocks that held up better than most during the selling, and then bounced better than most during the buying.
This simple cheat code is a great way to identify the stocks that are most likely to lead the market to new heights.
And I have two to share with you, so let's dive right in.
Here Are Two Trades I Like
If you’ve been paying attention, our first setup will be no surprise. Palantir Technologies $PLTR has been one of the market's top-performers since breaking out of its massive IPO base last year.
I love how the relative trend is leading the absolute trend to fresh highs. This is one of the best signals we get for our trade ideas.
Now, PLTR is back at a key extension level—the level where the correction began—and it’s looking stronger than ever.
It recently recaptured its ATH VWAP and is threatening to make new all-time highs on an absolute basis. This is likely to happen, as it has already cleared that mark on a relative basis.
We’re long PLTR above 109 with a target of 171.50. We've been riding this one for a long time, and we don't see any reason we should stop.
You need to have a subscription to access this content in full.
Log in or subscribe today to unlock new features and receive Member Benefits.
