7 Stocks With Relative Strength to Beat the Market
Even though Mr. Market has been selling off right now, it's not exactly the meltdown that it seems. The S&P 500 has managed to hold above support so far, a factor that points more to a healthy pullback in the broad market than an outright selloff. Uncertainty is still high right now -- so it pays to be tactical with your portfolio in April.
With trading conditions still looking murky, relative strength is still one of the best tools we have to identify stocks that are likely to beat the market this year. So how does it work?
Put simply, relative strength is a ratio of a stock's price to a broad market index. The ratio itself isn't important -- instead, it's the trend of the ratio over time that's investible. According to academic research, relative strength is a statistically viable strategy over a one-to-ten month time horizon; that's the timeframe we're focusing on today.
To find the seven names that made this list, I used a quantitative screen to rank the top S&P 500 names with relative strength over several timeframes, then weeded out the more attractive names using technical analysis.