My friend Ari Wald put something on my radar this weekend that I haven’t been able to stop thinking about.
Most people hear “buy the dip” and immediately look for whatever just got hit the hardest.
The problem is, a lot of the time those are the stocks doing the damage in the first place. They’re not victims of the market. They are the weight pulling it lower.
Ari flipped that idea on its head. Instead of focusing on the stocks dragging everything down, he’s looking at the ones getting pulled lower despite doing everything right.
These are the high-beta names showing positive momentum. “High beta” just means these stocks move more than the market.
So if a stock has a beta of let’s say 1.2, it tends to move about 20% more than the S&P 500, which has a beta of 1.
These are the stocks that have already proven they can outperform and are simply getting caught in the crossfire. That distinction matters more than people realize.
Because if you want to own the next leaders, they usually don’t come from the weakest groups. They come from the names that refuse to break, even when the environment gets messy.
A lot of the biggest winners this year have already shown their hand. Some of these stocks have doubled or tripled, and they’re still holding up near highs while the indexes churn.
That’s not an accident. That’s leadership.
So are you buying weakness in strength, or are you buying weakness in weakness?
Everything that follows comes back to that.
Look Beneath the Surface
When you actually take the time to go through the list of high-momentum stocks showing relative strength, one thing stands out right away.
There are a lot more of them than most people think.
That’s not the story you hear if you’re only watching the S&P 500 or whatever the mega-cap tech stocks are doing on a given day. From the top down, it can feel like nothing is working.
But once you go name by name, a different picture starts to come into focus.
And it’s not just energy, even though there’s plenty of strength there. This is showing up across industrials, technology, and other areas where momentum is already pointing higher.
What ties them all together is not the sector. It’s the behavior.
These are high-beta stocks that continue to show positive momentum and hold up near their highs:
This is the part that really matters. The list of high-beta winners is making new highs relative to the high-beta losers.
That tells you everything you need to know about where the pressure is coming from. The leaders are doing just fine. It’s the laggards that are weighing on the indexes.
So while the S&P 500 churns below that 7,000 level, the opportunity isn’t in trying to fix what’s broken. It’s in owning what’s already working and letting those names do the heavy lifting.
Once you start to see how broad that leadership really is, it naturally leads to the next question.
Where exactly are these names showing up, and how do we find more of them?
Where the Winners Actually Live
I’ve known Ari Wald for a long time, and he’s one of those people who consistently makes you better just by paying attention to his work.
This is a perfect example.
He’s not guessing. He’s not chasing headlines. He’s running a clean, repeatable process across the Russell 3000, which is basically the entire investable U.S. stock market.
From there, he tightens the net. Only stocks with a beta above 1.2. Only names with positive momentum. Only stocks trading above their 200-day moving average so we’re not dealing with anything stuck in a downtrend.
Then he filters again, cutting out anything under $5 billion in market cap to keep it liquid and institutional.
What you’re left with is a list of real stocks. Big names, names that institutions can actually own. And there are a lot more of them than most people would expect, about 100 stocks.
Yes, you’ll find energy in there. That’s obvious. But it doesn’t stop there. Industrials show up everywhere. Machinery, construction, engineering, building products.
Technology is well represented too, especially in semiconductors, electronic equipment, and communications equipment. That part shouldn’t surprise you, either.
Small-cap tech has been quietly putting together a three-week winning streak, but most people wouldn’t know that because they’re too busy staring at the same handful of mega caps all day.
That’s the disconnect. The leadership is there. It’s broad. It’s diverse. And it’s happening whether people are paying attention or not.
I’ll be putting some of these names to work this week. A few were already on my watch list before Ari ran this scan, which is always a nice confirmation.
This is why having smart people around you matters. They help you see what you might have missed. They keep you honest. They keep you sharp.
And at the end of the day, this isn’t complicated.
The winners are right in front of you.
The only question is whether you’re willing to own them.
Stay sharp,
JC Parets, CMT
Founder, TrendLabs