Mish's Market Minute

Which Megatrends Have the Hottest Trending Stocks?

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When looking for stocks that will continue to perform in 2021, we can look at the megatrends that will continue to grow considering the pandemic will be in the rear-view mirror.

On top of the list of trends is blockchain technology-and alternative currency. With Bitcoin above 52k and stocks like Riot Blockchain (RIOT), Canaan (CAN), MicroStrategy (MSTR), PayPal (PYPL), Microsoft (MSFT) and others jumping on the blockchain bandwagon, this trend will continue to change the landscape. 

In almost every industry, having a system that is transparent and as a decentralized database where all transactions are stored, many industries could benefit from blockchain. Not controlled by a central authority, its popularity and usefulness will grow.

Data collection also continues to grow. Although it overlaps with blockchain technology, real-time processing using the cloud and digital channels make data collecting much more insightful and useful. The hybrid cloud combines a private and public cloud which makes companies feel more secure. Amazon and Microsoft are 2 that offer these types of services.

Large organizations will be buying and selling more data as time goes on. This is already a huge trend in China. Other notable companies in this space include Datadog (DDOG), Zendesk (ZEN), PayPal and Cloudflare (NET). However, while these companies are in megatrend territory, technical analysis is critical, as all these stocks have dropped 20-40% from their highs. If the rates hold steady as the cost of capital rises with yields, then these could start moving up again. It would also behoove investors to look at the 200-day moving averages on most of these names, as the risk point though a break below could get costly.

Another megatrend is alternative energy and EVs. Because of this, I am watching electricity distribution very carefully. With predictions of demand expected to double at least, finding companies that are working on distributing electricity is another big area to watch.

To make it simple, there are ETFs you can trade. One, for example, is Dynamic Building and Construction (PKB), sitting at new all-time highs. First Trust Nasdaq Clean Edge (GRID) is another ETF which is consolidating, looking ready to go higher. A stock called Emcor (EME) is also rocketing to new highs. These are outperforming and should continue to do so.

With the rotation into value and domestic US sectors like transportation, small caps and retail, fundamentally, there has been a shift from growth to value. What is interesting is that, before the pandemic, the economy was holding steady at around 3.5% GDP but not really growing. This is a big reason tech did so much better than the small caps or transportation sector. Also, value stocks were well under pressure.  

Now, post-pandemic, with this recent move up in value, the economy must continue to grow beyond pre-pandemic levels. What could help are 2 major reforms, an Infrastructure package and Cannabis legalization. That is why looking at stocks in both spaces - like Tilray or the MJ ETF and the Transportation ETF (IYT) and some names in that basket - are also areas we expect to outperform.


  • S&P 500 (SPY): 392-394 resistance area 
  • Russell 2000 (IWM): Lots of resistance from 224-230
  • Dow (DIA): Needs to clear and stay over 320
  • Nasdaq (QQQ): 312.67 the 10-DMA
  • KRE (Regional Banks): Held over the10-DMA 66.64
  • SMH (Semiconductors): 216 support. 235 resistance
  • IYT (Transportation): 240 new support
  • IBB (Biotechnology): Main support the 200-DMA at 143.31
  • XRT (Retail): 93.48 next resistance to clear


Mish Schneider

MarketGauge.com

Director of Trading Research and Education

Mish Schneider
About the author: serves as Director of Trading Education at MarketGauge.com. For nearly 20 years, MarketGauge.com has provided financial information and education to thousands of individuals, as well as to large financial institutions and publications such as Barron’s, Fidelity, ILX Systems, Thomson Reuters and Bank of America. In 2017, MarketWatch, owned by Dow Jones, named Mish one of the top 50 financial people to follow on Twitter. In 2018, Mish was the winner of the Top Stock Pick of the year for RealVision. Learn More
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