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Early on in this Q4 earnings season we are seeing a very resilient market. Typically during the early stages of earnings season the market chops back and forth. Investors take the first earnings reports they can get their hands on and make wild assumptions on the rest of the stocks in that industry or sector. The result can be periods of extended volatility.
However, this market didn’t give us too much actual volatility. The VIX is putting around down near 12 and we’re not having the huge moves we’ve grown accustomed to seeing. So rather than come out here and look for stocks that have retraced a bit, I’m looking for stocks that are knocking on the door of their next breakout.
I’m not looking for just any breakout stocks though. I’m looking for stocks that are Zacks Rank #1 (Strong Buy) and Zacks Rank #2 (Buy) stocks with Momentum Style Scores of A or B. That way I’m not chosing stocks that only have decent charts, I’m also getting stocks that have had a recent earnings beat and earnings estimates that are moving in the right direction. These increased earnings estimate revisions help to justify the higher prices associated with the stock breaking out.
Applied Optoelectronics, Inc. designs, manufactures, and sells fiber-optic networking products primarily for Internet data center, cable television (CATV), and fiber-to-the-home (FTTH) networking end-markets. It offers optical modules, optical transceivers, lasers, transmitters, and turn-key equipment, as well as headend, node, and distribution equipment. The company sells its products to internet data center operators, CATV and telecommunications equipment manufacturers, and internet service providers through its direct and indirect sales channels worldwide.
The stock bottomed out in May 2016, crashing down below $8. From there is has been a runaway freight train, breaking on through resistance after every earnings report. The 20-day moving average has served as trend line support along the move. The most recent spike took shares up through the November high to new 52-week highs. There’s already been a healthy band of volume traded at $30. I think short-term support there should hold up.
Check Point Software Technologies Ltd. offers software and combined hardware products and services for IT security worldwide. The company offers a portfolio of network security, endpoint security, data security, and management solutions. Its solutions for data centers and enterprises include data center and enterprise network security appliances; integrated appliance solutions that provide integrated software and hardware bundles, direct support, and SEC public and private cloud solutions for integrated security.
Check Point chopped around in a broad trading range for most of 2016. $74 held the lows while $89 capped the highs. It wasn’t until last week that shares got enough momentum to break the top end of the range and put in new highs. I am a little worried about the gap from $92.23 to $94.50. I’d wait to see if this one retreats a bit before initiating a position but it’s certainly worth keeping on your radar.
The Progressive Corporation, through its subsidiaries, provides personal and commercial property-casualty insurance, and other specialty property-casualty insurance and related services primarily in the United States.
When you’re talking about runaway momentum stocks breaking higher you’re not usually thinking about an insurance company. They are about as boring as it gets. However, there’s nothing boring about this stock as shares have risen from $30 to $36 following Election Day. The 20-day moving average serves as support just below the current stock price. The commodity channel index or CCI just came down from overbought above 100 to the zero line. This sort of continuation pattern is something I’ve traded with great success the last several months.
Rio Tinto plc, a mining and metals company, finds, mines, and processes mineral resources. The company mines and produces aluminum products, including bauxite, alumina, and aluminum; copper, gold, silver, and molybdenum, as well as nickel; diamonds, titanium dioxide feedstocks, borates, and salt, as well as high purity iron, metal powders, zircon, and rutile; uranium; iron ore; and thermal coal, and coking or metallurgical coal.
Rio has one of the best looking charts I’ve seen in a way in that there are patterns which develop often. My aforementioned strategy of waiting for the CCI to come down from overbought to the zero line worked out several times last year. More recently, the strategy paid off in early January. I suggest waiting for the pattern to develop again, waiting for the stock to retrace it’s last move a little and try to enter closer to the 20-day moving average which sits near $40 right now.
United Rentals, Inc., through its subsidiaries, operates as an equipment rental company. It operates in two segments, General Rentals; and Trench, Power, and Pump. The General Rentals segment engages in the rental of general construction and industrial equipment, such as backhoes, skid-steer loaders, forklifts, earthmoving equipment, and material handling equipment; aerial work platforms, such as boom lifts and scissor lifts; and general tools and light equipment comprising pressure washers, water pumps, and power tools.
URI has taken off like it was shot out of a cannon on Election Day. Shares broke out from the top end of a brief consolidation range and re-established the bullish trendline from the February bottom. Even recent price action suggests the stock could continue to break on through to new 52-week highs. Stops could be placed just under the bottom end of the trading range of the last couple of weeks at $105.
Bottom Line
While earnings season lumbers on, the market is likely to chop around a little bit. However, stocks that have had recent surprises and have seen analysts push up estimates are likely to continue their post-Earnings drift. Here I’ve found five stocks that are pushing on through to new highs on very bullish earnings pictures. They could be the hottest stocks to start 2017.
You are welcome to download the full, up-to-the-minute list of 220 Zacks Rank #1 "Strong Buy" stocks free of charge. There is no better place to start your own stock search. Plus you can access the full list of must-avoid Zacks Rank #5 "Strong Sells" and other private research. See the stocks free >>
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The Five Fastest Moving Momentum Stocks of 2017
Early on in this Q4 earnings season we are seeing a very resilient market. Typically during the early stages of earnings season the market chops back and forth. Investors take the first earnings reports they can get their hands on and make wild assumptions on the rest of the stocks in that industry or sector. The result can be periods of extended volatility.
However, this market didn’t give us too much actual volatility. The VIX is putting around down near 12 and we’re not having the huge moves we’ve grown accustomed to seeing. So rather than come out here and look for stocks that have retraced a bit, I’m looking for stocks that are knocking on the door of their next breakout.
I’m not looking for just any breakout stocks though. I’m looking for stocks that are Zacks Rank #1 (Strong Buy) and Zacks Rank #2 (Buy) stocks with Momentum Style Scores of A or B. That way I’m not chosing stocks that only have decent charts, I’m also getting stocks that have had a recent earnings beat and earnings estimates that are moving in the right direction. These increased earnings estimate revisions help to justify the higher prices associated with the stock breaking out.
Here are five fantastic momentum stocks for 2017:
Applied Optoelectronics (AAOI - Free Report)
Applied Optoelectronics, Inc. designs, manufactures, and sells fiber-optic networking products primarily for Internet data center, cable television (CATV), and fiber-to-the-home (FTTH) networking end-markets. It offers optical modules, optical transceivers, lasers, transmitters, and turn-key equipment, as well as headend, node, and distribution equipment. The company sells its products to internet data center operators, CATV and telecommunications equipment manufacturers, and internet service providers through its direct and indirect sales channels worldwide.
The stock bottomed out in May 2016, crashing down below $8. From there is has been a runaway freight train, breaking on through resistance after every earnings report. The 20-day moving average has served as trend line support along the move. The most recent spike took shares up through the November high to new 52-week highs. There’s already been a healthy band of volume traded at $30. I think short-term support there should hold up.
Check Point Software (CHKP - Free Report)
Check Point Software Technologies Ltd. offers software and combined hardware products and services for IT security worldwide. The company offers a portfolio of network security, endpoint security, data security, and management solutions. Its solutions for data centers and enterprises include data center and enterprise network security appliances; integrated appliance solutions that provide integrated software and hardware bundles, direct support, and SEC public and private cloud solutions for integrated security.
Check Point chopped around in a broad trading range for most of 2016. $74 held the lows while $89 capped the highs. It wasn’t until last week that shares got enough momentum to break the top end of the range and put in new highs. I am a little worried about the gap from $92.23 to $94.50. I’d wait to see if this one retreats a bit before initiating a position but it’s certainly worth keeping on your radar.
Progressive Corp (PGR - Free Report)
The Progressive Corporation, through its subsidiaries, provides personal and commercial property-casualty insurance, and other specialty property-casualty insurance and related services primarily in the United States.
When you’re talking about runaway momentum stocks breaking higher you’re not usually thinking about an insurance company. They are about as boring as it gets. However, there’s nothing boring about this stock as shares have risen from $30 to $36 following Election Day. The 20-day moving average serves as support just below the current stock price. The commodity channel index or CCI just came down from overbought above 100 to the zero line. This sort of continuation pattern is something I’ve traded with great success the last several months.
Rio Tinto (RIO - Free Report)
Rio Tinto plc, a mining and metals company, finds, mines, and processes mineral resources. The company mines and produces aluminum products, including bauxite, alumina, and aluminum; copper, gold, silver, and molybdenum, as well as nickel; diamonds, titanium dioxide feedstocks, borates, and salt, as well as high purity iron, metal powders, zircon, and rutile; uranium; iron ore; and thermal coal, and coking or metallurgical coal.
Rio has one of the best looking charts I’ve seen in a way in that there are patterns which develop often. My aforementioned strategy of waiting for the CCI to come down from overbought to the zero line worked out several times last year. More recently, the strategy paid off in early January. I suggest waiting for the pattern to develop again, waiting for the stock to retrace it’s last move a little and try to enter closer to the 20-day moving average which sits near $40 right now.
United Rentals (URI - Free Report)
United Rentals, Inc., through its subsidiaries, operates as an equipment rental company. It operates in two segments, General Rentals; and Trench, Power, and Pump. The General Rentals segment engages in the rental of general construction and industrial equipment, such as backhoes, skid-steer loaders, forklifts, earthmoving equipment, and material handling equipment; aerial work platforms, such as boom lifts and scissor lifts; and general tools and light equipment comprising pressure washers, water pumps, and power tools.
URI has taken off like it was shot out of a cannon on Election Day. Shares broke out from the top end of a brief consolidation range and re-established the bullish trendline from the February bottom. Even recent price action suggests the stock could continue to break on through to new 52-week highs. Stops could be placed just under the bottom end of the trading range of the last couple of weeks at $105.
Bottom Line
While earnings season lumbers on, the market is likely to chop around a little bit. However, stocks that have had recent surprises and have seen analysts push up estimates are likely to continue their post-Earnings drift. Here I’ve found five stocks that are pushing on through to new highs on very bullish earnings pictures. They could be the hottest stocks to start 2017.
You are welcome to download the full, up-to-the-minute list of 220 Zacks Rank #1 "Strong Buy" stocks free of charge. There is no better place to start your own stock search. Plus you can access the full list of must-avoid Zacks Rank #5 "Strong Sells" and other private research. See the stocks free >>