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Bull Train Has Left the Station

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Last week, many market players were still quoting that tired, useless, fence-sitting aphorism "we're not out of the woods yet."

Here's what I wrote in Best Charts of the Bounce...

When market players were unsettled and pretty emotional during the "flash correction" of early February, many sold stocks and waited for signs of the all-clear.

Unfortunately, Mr. Market doesn't give you a lot of time to analyze all the news and data points, make up your mind, and get over your fear.

By the time the worst news is priced-in, he's already made some serious capitulation lows and is riding the value train to price-in rising earnings estimates in a strong economy.


After describing to my followers why the hidden "W" bottom may have already occurred -- and how it justified the visible "V" bottom that was in progress -- I focused on our purchases of Technology and Consumer stocks during the "flash correction" that were leading the charge higher: Alibaba (BABA), NVIDIA (NVDA), Lam Research (LRCX - Free Report) , and Square (SQ - Free Report) .

And by the end of last week, the Nasdaq 100 (NDX) had not only cleared most resistance levels, it had actually exceeded the Feb 2 highs, essentially reversing the correction. Here's today's NDX chart clearly headed for new highs soon...



The S&P index is following the Nasdaq strength with today's closure of the big Feb 2 gap down. This week, we should see the benchmark back above 2800 once the Powell Fed anxiety has disappeared.

What Else Looks Good?

Thankfully, we also held on to our Apple (AAPL - Free Report) shares during all that "peak iPhone" pessimism and its rally back toward all-time highs is impressive, but not surprising. It's also certainly fueling the NDX.

Plus, during the tumult, we ramped up our exposure at the correction lows with the 3X leveraged ProShares UltraPro Nasdaq 100 (TQQQ - Free Report) .

And, one of our sleeper holdings is a little semiconductor maker called SMART Global Holdings (SGH - Free Report) . I call it the "lil Micron" because it makes memory and flash components and trades at a similar valuation on some metrics like P/E and PEG.

SMART trades at under 7 times this fiscal year's (ending in August) $5.00 EPS consensus.

But with only a $635 million market cap and an estimated $1.13 billion in sales this year, SGH trades at a price-to-sales multiple of just 0.56.

The behemoth of memory, Micron, trades at 1.77 times sales.

And while the David and Goliath of memory share a PEG (PE ratio vs. Growth rate) of 0.46, Micron's growth is expected to fall to flat next fiscal year (also beginning September) on both the top and bottom lines.

Meanwhile, SMART Global is expected to maintain mid-teens percentage growth for sales and profits. In my book, SGH could be the perfect add-on for a larger semi player.

Be sure to swing by TAZR Trader to find the best stocks with the best chart setups as the market swings to new highs.

Disclosure: I own shares of BABA, LRCX, NVDA, AAPL, SQ, SGH and TQQQ for the Zacks TAZR Trader portfolio.

Kevin Cook is a Senior Stock Strategist for Zacks Investment Research where he runs the TAZR Trader service. Click Follow Author above to receive his latest stock research and macro analysis.



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