Hey Traders,
I’m still out in Colorado this week, doing a little fishing and not worried about much.
But I know a lot of folks got rattled this morning when the market started sliding.
Here’s the thing — you shouldn’t be surprised. After the kind of run we’ve had lately, a pullback is natural.
Could be the start of the late-August/September seasonality where things get rough… or it could just be noise.
Either way, I’ve got a trick I use on down days that helps me zero in on the strongest stocks.
My 52-Week High Trick
When the market’s red, I pull up a list of stocks making new 52-week highs. (If you don’t own my custom built TrendPoint software, here’s a simple way you can find stocks hitting new 52 week highs right at home with free tools.)
Why? Two big reasons:
- If a stock is hitting a high while the rest of the market is sliding, that shows relative strength — it’s stronger than the crowd.
- A new high means there’s no overhead supply — in other words, fewer bag-holders waiting to sell at breakeven. That gives the stock more room to run.
And here’s a bonus: if it’s up on a down day, it’s really going to run when the broad market turns green again.
Narrow the List to the Best Candidates
Sometimes there are 150–200 stocks hitting new highs. That’s too much. So I cut it down with a few rules:
- Must be listed on a major exchange.
- Must trade over 1 million shares a day (keeps liquidity high).
- Must be above $25 a share. (I’ve tracked this in my own journal — trades under $25 were consistently some of my worst.) Big institutions don’t play with the cheaper stuff, so I don’t either.
That filter usually gets me down to a manageable handful — about three good setups.
Find Strength in an Uptrend
One last step: I want stocks that are hitting new highs within an existing uptrend, not just popping on some one-off news headline.
That way, I know I’m catching a train that’s already moving. From there, it’s simple:
- Set a profit target 7–15% higher.
- Set a stop loss 5% lower.
- Let it ride.
Most trading platforms will let you set an OCO (one cancels other) order, so you can put both of those orders in and it’ll either sell at a profit or get you out at a small loss.
This way you don’t have to babysit your trades.
A Few Names I’m Watching
Today’s market may be red, but there’s plenty of premium to be made. A few names that jumped out:
- Gap Inc (GAP)
- iShares Bitcoin Trust ETF (IBIT)
- Robinhood (HOOD)
Each of these fits the criteria and is worth a closer look, whether it’s trading straight shares, doing covered calls or another income strategy.
Bottom Line
A down market isn’t bad news. It’s an opportunity to spot what’s strong enough to buck the trend.
Stick to stocks hitting new highs, filter for quality, and make sure they’re in an uptrend. Do that, and you’ll always know where the real strength is hiding.
Trade well,
Jack Carter
P.S. Another way to find strong stocks in a weak market? My list of stocks with a track record of popping in August. Check them out here.
