Finding Winning Stocks in Down Market

(By Ken Little)

When the stock market is on a slippery slope with no obvious way to gain traction, it’s easy to assume that the only way is down for all stocks.

However, in every market you can find winners.

A quick look at close-of-market statistics revealed some interesting facts:

  • Almost 70 stocks hit new 52-week highs
  • More than 135 stocks recorded a closing trade that was in excess of 20 percent higher than its 200-day moving average.

While it’s true that 70 new highs is a very small number compared to what might be recorded in a bull market or even in a flat market, at least some companies are doing well.

Impressive Stocks

The more impressive number is the 135-plus stocks trading at least 20 percent over their 200-day moving average.

This is impressive in a market trading in a range well down from the lofty highs of last year and when most stocks are going the opposite direction.

If you reverse the screening process and look for stocks trading 20 percent below their 200-day moving average price, the number rises to 794.

Two Points

The point of this exercise is two-fold: one to demonstrate there is always money to be made in the stock market if you can identify the right investments for the right market.

The second point is you can perform stock screens to identify potential investments in good or bad markets.