Since our last update, the stock market has broken out of the trading range that it had be locked in since late October and most indexes have, or are close to, making all time highs. As we noted in our last article, a move to new highs would need to feature a meaningful increase in volume and a broader participation in the number of sectors and stocks making new highs. Recently, we have seen a convincing expansion in the number of sectors and individual stocks making new highs. Unfortunately, the volume has been unimpressive. Bearing this in mind, the trend is now up and we will look to add new companies to our portfolios which feature high quality chart patterns and the following key ingredients found in high performing stocks: consistent and rapid growth in top and bottom lines that are driven by leading new patents, FDA approvals, or high barrier to entry products or services. These differentiation factors should help such companies to grow robustly for the foreseeable future.
These companies are typically found in the strongest segments of the U.S. economy such as those related to healthcare, led by strength in the Biotech and Generic Drug sector, and those related to the information technology industry, led by software companies - in particular those involved in computer and network security. Also in high tech, the semiconductor manufacturers remain in favor. We will proceed with caution.
Disclaimer: Rocket Capital Management is a registered investment adviser. The comments presented do not constitute personal advice and are not intended to be a solicitation for the purchase of any individual securities or investment strategies. All investing involves risk. Please consult with a registered adviser before making any investment decisions.