What are we looking for?
Price trend-focused opportunities in U.S.-listed equities.
The S&P 500 index continues to trend higher, remaining above its 20-week moving average since the beginning of 2024 and posting new record highs on almost a weekly basis. Analysts at Trading Central are always interested in identifying stocks that are trading at, or close to, 52-week and new record highs, powered by strong price momentum and technical resilience. For traders closely adhering to a trend-following strategy, these metrics carry significant importance.
A trend-following strategy in U.S. equities entails identifying patterns in stock prices and executing trades to capitalize on those trends, relying on signals such as moving averages. Investors and traders employ technical indicators such as moving averages to validate trends and employ risk management tools such as position sizing and tight stop-loss orders in case the trend reverses quickly.
The screen
In our initial screening process, we focused on U.S. stocks with a minimum market capitalization of US$1-billion in order to identify more well-established companies.
A trend-following strategy prioritizes stocks that consistently establish higher highs and higher lows. During our screening process, we specifically sought stocks trading within a five-day range of their most recent 52-week high. Our preference is to “buy high and sell higher,” using stop-loss orders to mitigate risk in case of a strong reversal of the uptrend.
The TC Quantamental momentum factor underscores the tendency of bullish momentum stocks to maintain their positive performance over the short term. Throughout our screening process, we concentrated on stocks with a rating of 70 or higher out of 100, assessing both the stock’s price trend and investor interest in comparison with industry peers.
Finally, we incorporated two technical analysis elements, giving emphasis to classic-pattern breakouts to the upside and bullish momentum indicators both discernible through Trading Central Strategy Builder:
We have also included year-to-date and one-year return for informational purposes.
More about Trading Central
Trading Central is a global leader in financial market research and investment analytics for retail online brokers and institutions. Its product suite provides actionable trading ideas based on technical and fundamental research covering stocks, exchange-traded funds, indexes, forex, options, and commodities. Strategy Builder, our stock screener is available through leading retail brokers in Canada and worldwide.
What we found
The overall results identified many stocks in the software and semiconductor industries.
Topping our list is software company Palantir Technologies, PLTR-N which builds software to assist in counterterrorism investigations and operations. The stock has a market cap of US$57.89-billion, a TC Momentum Factor rating of 72, and just confirmed what is known as an ascending continuation triangle pattern, which resulted in a new record high price at the time of this writing. An ascending triangle, with its increasingly higher lows and constant highs, indicates that buyers are more aggressive than sellers. The pattern typically forms because a supply of shares is available at a certain price, represented by the upper flat line. When the supply depletes, the shares quickly break out from the top trendline and move higher.
Deckers Outdoor Corp. DECK-N a footwear, apparel and accessories manufacturer with brands such as HOKA and Teva, has the highest TC Momentum Factor rating on our list at an impressive 96 out of 100. The stock also confirmed an ascending continuation triangle pattern on Feb. 29, then posted a new record-high on March 4 after the breakout.
Trading Central Strategy Builder offers a back-testing feature, allowing users to assess the historical performance of an investment strategy. Utilizing a five-year historical period with quarterly rebalancing, the described screen demonstrates an impressive 25 per cent annualized total return, outperforming the S&P 500 index, which achieved a 13-per-cent annualized total return over the same period.
The investment ideas presented here are for information only. They do not constitute advice or a recommendation by Trading Central in respect of the investment in financial instruments. Investors should conduct further research before investing.
Gary Christie is head of North American research at Trading Central in Ottawa.
Gary Christie