Oftentimes, as an exceptionally strong stock continues to outperform the broader markets, it's hard to not get excited and jump on board as the stock advances to new highs. Believe me, as an expert in capturing momentum stocks on their way to outperforming the broader markets, I've chased more than a few stocks on their way to greater heights.
The pain of losses due to a natural pullback in these fast-moving stocks has made me wiser about identifying a proper buy point. Last week's drop in leading Software stocks provided just this lesson, as a selloff pushed many of the leadership names in this group sharply lower. While concerning, the good news is that many names found support at critical areas which, in turn, was an ideal buy point.
DAILY CHART OF ADOBE SYSTEMS, INC. (ADBE)
Adobe Systems (ADBE) is a great example, as last week's pullback to its 21-day moving average was a perfect time to purchase this top performing stock. A quick look at its daily chart would confirm that, historically, this key 21-day moving average acted as support from which the stock could spring higher. Of course, you'll want to make sure that the stock you're considering purchasing is in an uptrend before viewing any pullback as a buying opportunity.
Other leading stocks pulled back even further, such as Zoom Video (ZM), which found support at its 50-day moving average before advancing 37% higher from its pullback.
Adobe (ADBE) and Zoom Video (ZM) are part of a select group of leading Software stocks from my MEM Edge Report that I highlighted as being in a buy zone last week after pulling back to a key area of support. These key areas of support are part of several important characteristics that can determine the ideal buy point in high performing stocks.
If you'd like to be alerted to this type of bullish action from these and other select leadership stocks, I urge you to trial my MEM Edge Report for 4 weeks at a nominal fee. In addition to individual stock picks, this bi-weekly report also provides broader market and sector insights not seen anywhere else. Click here now for immediate access to this week's report, as well as a 15-minute video highlighting ideal buy points.
Warmly,
Mary Ellen McGonagle,
MEM Investment Research
