Stocks Outperforming RSP

In the wake of the recent market correction, we’re seeing a strong bounce in the indices. This raises an important question: Are we witnessing a rotation from technology stocks into value stocks? It’s possible. However, should the Federal Reserve decide to lower interest rates, we might see capital flowing back into tech stocks.

Instead of getting lost in speculation, it’s wise to adhere to the principle of “Look at the charts.” After all, strong charts drive market indices higher.

For this analysis, I’ve chosen the Invesco Equal Weighted S&P 500 ETF (RSP) as a reference point.

Methodology

Identify Key Turning Points

I focused on three crucial periods:

Over the past year, the chart highlights key turning points, specifically the bottom on October 27th, the bottom on April 18th, and the peak on July 16th. Using these points, I have identified stocks that have consistently outperformed the RSP across these critical timeframes.

Search for Outperformers

Using TransTrader, I built a search engine to find stocks that have outperformed the RSP during these key periods. The search focuses on:

• Stocks outperforming from October 2023 to July 2024.
• Stocks outperforming from April 2024 to July 2024.
• Stocks outperforming from July 2024 to the present.

Analyze the Results

Out of this search, I identified 49 companies that consistently outperformed the RSP.

This watchlist provides a focused group of stocks to monitor in the coming weeks. Running daily searches for hundreds of companies can be overwhelming, so I recommend simplifying by sticking with this curated list.

Click here to watch the video

Refining the Watchlist

Next, I applied further analysis to refine this list. I included performance since specific dates and an Aroon 20 indicator, which helps identify momentum. Why Aroon 20? Since the July 16th peak, it’s been 21 days, making Aroon 20 an ideal parameter.

High Upward Momentum

Look for stocks where Aroon+ is at 100, and Aroon- is at 0. Examples include UHS and WELL, indicating strong upward trends.

Potential Breakouts

Stocks like FIS and DVA show Aroon+ at 100 with a high Aroon-, suggesting they might be on the edge of a breakout.

Even the stocks at the bottom of the list aren’t necessarily bad. For instance, GEV, with an Aroon+ of 0, had its peak on July 16th, but it’s only 1.69% below that high—a sign of resilience.

Conclusion

This is a crucial analysis I conduct after every correction. It has often led to discovering significant winners. I hope you find this approach valuable and do find stocks outperforming RSP.