As the financial markets get more and more expensive and asset prices continue disconnecting from underlying fundamentals, there are still some attractive opportunities out there.
I run a series of screens on ChartMillover the weekend to identify some of the sectors, themes and strategies that look poised to outperform in the coming weeks.
Overall, I'm still cautious on equities here, but the charts are indicating that some areas could be ready to move higher still.
Here are three of the charts identified by my ChartMill screens as potential outperformers.
iShares Russell 1000 Growth ETF (IWF)
Growth has been an outperforming theme for years, but there's little sense that investors are willing to give up on it any time soon. Value outperformed briefly earlier this year, but growth has essentially captured it all back in a manner of weeks.
You can see in early June where growth stocks dipped. They touched that trendline and moved below it briefly, but the group managed to hold. It ripped back up above the trendline and is now on the verge of setting new all-time highs. Momentum remains with this group and it could retest the 194 level as early as this week.
First Trust Dow Jones Internet ETF (FDN)
The chart of this ETF looks very similar to that of IWF and the story is pretty much the same too. Internet stocks, and the tech sector in general, was a brief underperformer before optimism about an economic reopening took over and tech regained its market leadership.
Tech has been somewhat of a defensive sector this year managing to outperform even in falling markets. FDN has already surpassed its all-time highs and is well above its bear market peak before March. Relative strength looks good here and I wouldn't be surprised at all to see additional gains.
Invesco Solar ETF (TAN)
Solar has bucked the energy sector trend this year and has been the sector's clear winner. While the broader energy sector is still down 33% year-to-date, TAN has gained 14%.
Weaker energy demand is still the overriding theme here, but more investors seem willing to bet on the potential of a shift to clean energy. In the short-term, however, the chart shows a wedge pattern indicating a potential breakout coming soon. The steadily supported uptrend means the odds are better for that breakout move to be to the upside.
By David Dierking