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Investment Ideas

I have no doubt that the market has experienced a surge in momentum following the election. As the Trump transition is going through its initial stages, the market has had a sort of Trump rotation. That is money flowing out of government and investment grade corporate bonds and into sectors of the market like industrials, financials and healthcare.

Looking to get a jump on the week, I’ve decided to put together a list of the top momentum stocks at Zacks.com. These are stocks which are Zacks Rank #1 (Strong Buy) stocks which have Momentum Style Scores of “A” or “B” which are breaking out to new highs. With several bullish estimate revisions creating a tailwind for these stocks, the price breakout through to new highs should be sustainable. Here are the five hottest momentum stocks this week:

Allison Transmission (ALSN - Free Report)

Allison Transmission Holdings, Inc., together with its subsidiaries, designs, manufactures, and sells commercial and defense fully-automatic transmissions for medium- and heavy-duty commercial vehicles, and medium- and heavy-tactical U.S. defense vehicles.

The stock has recently broken out from a consolidation range it was locked in since mid-April. That range extended from $26 to nearly $31. Over the last couple of weeks, shares have broken out from the top end of the range, shortly after a bullish moving average crossover in early October. That’s when the 20-day crossed over the 50-day. The signal was confirmed when the commodity channel index (CCI) pushed higher from oversold at -100 and up through the zero line in late October.  

Huntington Bancshares (HBAN - Free Report)

Huntington Bancshares Incorporated operates as a holding company for The Huntington National Bank that provides commercial, small business, consumer, and mortgage banking services. 

Huntington has been in an uptrend since pushing above the 20-day moving average in mid-July. However, it wasn’t until the election that shares really started to rally sharply, breaking above $10.50 and getting to $12.50 the end of last week. Shares seem a little overbought with the CCI up at 108. I’d be more comfortable getting back on board after seeing that CCI come down to the zero line.

Las Vegas Sands (LVS - Free Report)

Las Vegas Sands Corp., together with its subsidiaries, develops, owns, and operates integrated resorts in Asia and the United States. It owns and operates The Venetian Macao Resort Hotel, Sands Cotai Central, the Four Seasons Hotel Macao, Cotai Strip, the Plaza Casino, and the Sands Macao in Macao, the People¿¿s Republic of China; and iconic Marina Bay Sands in Singapore. The company also owns and operates The Venetian Resort Hotel Casino, The Palazzo Resort Hotel Casino, and Five-Diamond luxury resorts on the Las Vegas Strip; Sands Expo and Convention Center in Las Vegas, Nevada; and the Sands Casino Resort Bethlehem in Bethlehem, Pennsylvania. 

Contrary to the other names on this list, the breakout in LVS started much earlier. Rallying off the lows in July, LVS broke out from the $54 level in mid-September before consolidating in a much higher range for the last two months. Recent price action has followed a CCI “Buy” signal late last week as a new 52-week high was carved out. This could be the breakout stock of the week here.

Nvidia (NVDA - Free Report)

NVIDIA Corporation operates as a visual computing company worldwide. It operates in two segments, GPU and Tegra Processor. The GPU segment offers processors, which include GeForce for PC gaming; Quadro for design professionals working in computer-aided design, video editing, special effects, and other creative applications.

I’ve been very bullish on NVDA for a long time. In fact, here’s me recommending a long call on NVDA in February of last year on Bloomberg: http://www.bloomberg.com/news/videos/2016-02-04/options-update-how-to-play-nvidia

To be honest, I didn’t think the company had anything left in the tank this quarter and was looking to short out of the money calls, while staying long term bullish on the company. Needless to say, that trade did not work out but I’m still pleasantly surprised with NVDA. The breakout on earnings has now taken shares to the mid-$90s. This is a stock that was at $25 when I recommended it last February.

Teradyne (TER - Free Report)

Teradyne, Inc. designs, develops, manufactures, and sells automatic test equipment worldwide. Its Semiconductor Test segment designs, manufactures, sells, and supports semiconductor test products and services for wafer level and device package testing in automotive, industrial, communications, consumer, computer and electronic game applications, and others.

It appears as if there was an exhaustion of selling on October 21st. The huge range that day shows that sellers tried to force the stock down but buyers ultimately stepped in and the stock finished higher on the day. From there, a CCI “Buy” was triggered and shares rocketed higher. Over the last two weeks, the stock has consistently made new 52-week highs nearly on a daily basis.

Bottom Line

The market is en fuego right now. You want to make sure that you’ve got your money positioned in the hottest momentum stocks in order to take full advantage of the rally. By applying the power of the Zacks Rank to stocks showing fantastic price momentum in the middle of breakouts, you give yourself great odds of short term trading success.

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