The ebb and flow of the markets always keeps things interesting, but when fast-moving, high growth stocks were stopped in their track's midyear, it was quite perplexing. Many of these stocks still had strong growth prospects that would normally continue to propel them higher. Instead, investors' interest turned to more cyclical Industrial and Financial stocks that offered lower multiples, as they reported earnings that were better than expected.
After 4 months of underperformance, I'm excited to see a number of high-growth stocks that are picking themselves up off the mat and beginning to reverse their downtrends. When the return to these faster-moving stocks begins, you'll want to hop on board as you're now buying growth at a much cheaper price.
DAILY CHART OF INTUIT, INC. (INTU)
Above is a prime example of the return back to select growth stocks that lost their luster over the past several months. Intuit (INTU) was a big winner for subscribers of my MEM Edge Report during the first half of this year. The stock was part of the once-strong Software group and INTU posted double-digit returns before peaking in price in August, despite posting solid earnings and sales.
More recently, we can see that the stock has bullishly broken back above its key simple moving averages. This is the number one ingredient for downtrend reversals, as these moving averages will often act as upside barriers while the stock is in a downtrend. The fact that this recent action was on volume is even more positive.
I've also pointed out the secondary RSI and MACD indicators that have simultaneously turned positive. While all this points to more upside, it's important to note that this company is due to report earnings on Friday.
There are other once-hot stocks in high growth areas that are coming back into favor. One way to screen for these stocks is to look for high performers into late July that are now 10% or more below their peak in price. Not all of these stocks are in recovery mode, however, so paying close attention to the charts is going to be critical.
For those who'd like to be alerted to specific leadership stocks that are reversing downtrends, take a trial of my MEM Edge Report at a nominal fee by using this link here. This bi-weekly report specializes in identifying high-growth stocks that are poised to outperform the markets.
In other news, I'm excited to announce my participation in "Market Vision 2020", - an online financial conference with other StockCharts.com commentators that will take place soon. *CLICK HERE* to subscribe to the free newsletter that will provide you with all the information. There will be lots of giveaways and free educational events for everyone who follows along – don't be left out!
Warmly,
Mary Ellen McGonagle,
