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Weekend Wisdom

You cannot count all the pundits that say the easy money has been made. But why would they say such a thing when it obviously isn't true? The simple answer is that they fear it could be coming to an end and want to keep more of it for themselves. To make that easy money, you just have to follow the simple ideas I will list below.

Before I get to these easy-to-understand ideas, I want to get everyone on the same page in respect to the current market conditions. The markets have shifted dramatically and what you once thought was the best place to be positioned during a "risk on" market has changed.

One of the biggest changes in the market is something that used to be associated with a market moving lower. Uncertainty used to prey on the hearts of those that held long positions in risky assets. Now we are swimming in a sea of uncertainty as the new administration begins to crystallize their plans. Wise investors will use this to their advantage; others will be paralyzed by it.


The New Administration

Changes will be significant. Republicans didn't exactly embrace the election winner and Democrats are in a position of need following losses in the House and Senate. All we know is the new President is a brash and aggressive talker, but actions speak louder than words.

Speaking of those actions, we don't know what they will be. Policy is still being formulated, so the winners and losers are still up in the air. There are early indications that Tech and Consumer Staples will be out of favor for some time to come. The flipside is that industrials look to be poised for a significant resurgence.

Potential OPEC cuts combined with a new foreign policy, especially towards Iran, could have a huge impact on oil prices. Those changes to the current climate would result in higher oil prices, but there could be a tailwind from a stronger dollar that could mute some of the price inflation.

More . . .


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Some Gains Made, Not All

The election bounce was great if you were positioned for it. Yes, those were some easy gains and even more importantly there were some really outsized moves. Investors that were paying attention to what the candidates were saying could easily have found themselves ready to react to whoever won.

Being positioned for the next leg is essential to make that easy money. It is nearly inevitable that many of the same stocks that ran up will experience some profit taking. The same names that have soared 20% and 30% or more will likely be giving back sizable portions of those gains. Investors that take profits don't go broke, but they also allow others to get into the same stocks.

Look for stocks with a Zacks Rank #1 (Strong Buy) or Zacks Rank #2 (Buy) that have run up and put them on your wish list of stocks. These stocks will likely all pull back at the same time so be diligent in your monitoring of them.


Babies And Bath Water

Just as there are plenty of stocks that have run up, there are dozens of high quality names that have been unduly punished. This post-election rally has seen a fairly large shift that investors call a sector rotation. In this rotation out of some recent top performers, investors are being given a golden opportunity.

Again I want to leverage the Zacks Rank to find some of these babies that have been thrown out with the bath water. The Zacks Rank will lead me to the stocks that have seen the strongest positive earnings estimate revisions. Now focus on the stocks that are down 5% to 10%. You don't want the names that have been crushed -- they are not coming back anytime soon.

Whether you are into growth stocks or value plays, you can find the best names by searching for high quality. Utilize the Zacks Style Scores to hone in on the names you want in your portfolio. Stocks that have a growth Style Score of "A" tend to perform better than those with a "B" or lower. The same goes for the value stocks that you can search for.


Really Explosive Movers

Looking for quality names that are pulling back is really good. Finding stocks that have been unduly punished is even better. Those are really good strategies for finding winners in this market, but they are not the best.

I saved the best strategy for last, so let's get right to it! Over the last few weeks, small caps have been leading the market. When that happens they tend to have outsized gains in comparison. Among the small caps, the segment that posts the biggest gains are often the stocks that are only one digit.

Low priced stocks that leverage the strong Zacks Rank and good style scores is where I will find the biggest winners for the next 2, 3 and 6 months. These stocks offer explosive growth and a low price tag to boot. When properly diversified, these stocks can make it feel like you are making easy money!

If you'd like to grab your share of the next wave of "easy money," you may want to look into my Stocks Under $10 portfolio.

Stocks Under $10 focuses on companies on the verge of big upward moves. We get in when our proven indicators point to success ahead, and ride them long and high. In the post-election sector rotations that are already underway, we should certainly be able to find our fair share of doubles and triples as time rolls on.

So if you are interested in low-priced stocks, with improving fundamentals and great upsides, I invite you to check out Stocks Under $10 today.

In fact, now is an ideal time to get started. On Monday morning, I'm planning to add a stock that is building tremendous momentum coming off a low and has outstanding gain potential. You can get aboard at the beginning of what looks to be a very profitable ride.

In addition to checking out Stocks Under $10, you are welcome to download our just-released Special Report "7 Best Stocks for the Next 30 Days" absolutely free.

We see these 7 stocks outperforming the market over the next month. They are taken from the proven list of 220 Zacks Rank #1 Strong Buys and are poised for immediate breakout. But a word of caution: Your chance to download this report for free ends at midnight Sunday, November 20.

Learn more about Stocks Under $10 right now >>

Best,

Brian

Brian Bolan is our aggressive growth expert and the editor of the Zacks Stocks Under $10 portfolio.