“In terms of stocks, there are 6,000 girls out there. If 20 or 30 of them look great, I don’t need to bother with the rest.”
That’s a classic line from Stanley Druckenmiller, one of the greatest portfolio managers of all time.
Funny enough, Druckenmiller was quoting one of his old bosses when he said it. But the philosophy stuck with him — and for good reason. This is a guy who averaged 30% annual returns from 1981 to 2010 and never had a losing year.
At TrendLabs, we take the same approach. We start with the entire universe of stocks, narrow it down with a strict set of criteria, and focus only on the ones that truly stand out.
We’re not trying to catch every move in every ticker — just the best setups in the strongest trends.
How Do We Filter?
How we narrow 6,000 stocks down to 20 or 30 depends entirely on the strategy.
At TrendLabs, we publicly share two core strategies: The Divergence and The Primary Trend.
The Divergence
This strategy is all about finding extremes in positioning — when everyone’s leaning one way, we look for opportunities to play the unwind.
To even make our watchlist, a stock (or its industry group) has to show unusually high short interest or be tied to an asset undergoing a major unwind.
Think of the Chinese stocks we’ve been buying this year — they were set up perfectly thanks to the massive unwind driving the weakening U.S. Dollar.
We start with 6,000 stocks, narrow that down to about 50, and then wait for price to break through key levels before taking action.
We’re not contrarians for the sake of being contrarian — we wait for the trend to actually turn first. That’s the core of our top-down approach with The Divergence.
The Primary Trend
The filtering process here is totally different. The goal isn’t to fade the crowd. It’s to find and own the very best stocks.
When you study every great stock of all time, they all have three things in common: strong uptrends, positive momentum, and relative strength.
So we focus only on stocks that check all three boxes. That’s how we get from 6,000 names down to about 50 using the Primary Trend strategy.
Both approaches are different paths to the same goal: narrowing the universe to a small group of high-probability setups.
You don’t need to chase 6,000 stocks. Just find your 20 or 30 that look the best — like Stan Druckenmiller’s boss used to say.
How So in This Market?
Here’s an example of a stock pressing up against new all-time highs.
Tesla (TSLA) is a great case study — it fits the mold for both The Divergence and The Primary Trend strategies.
It’s showing positive momentum, strong relative strength, and a short-term uptrend within the context of a much larger structural uptrend.
It’s also the largest component of the ARKK Funds, which just hit its highest short interest on record — a perfect setup for both strategies.
Tesla is on pace to close the week at its highest price ever:
Whenever in doubt, zoom out.
Tesla already made new all-time highs on both a monthly and a quarterly closing basis. And now it’s working on doing the same on the weekly timeframe.
This is exactly the kind of stock we want to focus on — one that’s trending, showing strength, and attracting skepticism from the crowd.
We don’t need to chase every name in the market.
We just need to find the best setups — the leaders that stand out for all the right reasons — and let the trends do the heavy lifting.
Stay sharp,
JC Parets, CMT
Founder, TrendLabs