Trending stocks garner attention from all corners of the market. This buzz creates profitable trading opportunities for both longs and shorts. News of record quarters, dividend cuts, or new regulation creates, sustains, or ends trends. It is at this point massive amounts of money are won and lost.
This article discusses the top trending stocks today. Additionally, it offers guidance on what makes stocks trend in the first place. The age old saying “the trend is your friend” is not a lie. These stocks offer investors large profits with little to no management required.
Trending Stocks Today
Many stocks trend in this market, after all it is the longest bull run in history. However, one must remember why the stocks are trending. Trend following is a profitable strategy only if a trader sticks to his discipline. The best trend following traders capture the meat of the move. Selling highs and buying lows is not a concern for these traders.
Netflix, Inc. (NASDAQ : NFLX) engages in the Internet delivery of television shows and movies on various Internet-connected screens. The company created its own industry and changed entertainment forever. Many still doubt the company, even as it trends to all time highs. They recently went on a spending spree, signing some of the top talent in the industry. The company believes this will aid in adding new subscribers each quarter.
Additionally, this top trending stock shows impressive earnings-per-share (EPS) growth. This metric grew almost 300% quarter over quarter (Q/Q). This names always comes with significant buzz. Consumers nor investors can get enough NFLX. This name is a market leader and a top stock trending up today.
Amazon.com, Inc. (NASDAQ : AMZN) engages in the retail sale of consumer products and subscriptions in North America and internationally. The company recently expanded outside of consumer goods. They announced initiatives relating to the healthcare space. This only further solidifies the company as a dominant player. The stock continues to trend higher showing year to date returns over 25%.
Also, the company has the ability to crater its opponents. After the announcement of entering the grocery space, similar retailers dropped for a time. However, the company continues growing sales Q/Q over 35% despite the focus of expansion. There is no telling how high this stock can trend given its aggressive executive management and consumer reach.
Trending Stocks In The Market
News sticks with companies once a trend is started. When news is first released, stocks react. After choosing a direction, news relating to the initial move is released. This process repeats throughout the trend of a stock. With each news release, the market digests its significance and reacts accordingly. Take the next stock for example.
Apple Inc. (NASDAQ : AAPL) designs mobile communication and media devices to customers worldwide. The success of this company made it the largest company in the world. However, this name recently experienced negative press relating to its IPhone batteries. The stock made a strong move lower. Buyers soon realized that the stock was trading at a discount, and bought the dip.
Additionally, this speaks to the strength of trend direction. Such negative news relating to one of its core products is not typically a buying opportunity. However, this trending stock continues to move higher.
Wells Fargo & Company (NYSE : WFC) a diversified financial services company, provides retail, commercial, and corporate banking services to individuals, businesses, and institutions. This company shows a strong balance sheet and fair valuation. However, it is trading lower than many of its peers. The company revealed negative news many times recently related to shady sales tactics.
Consequently, the company endured many management changes. The stock underperformed its peers for a long time. Recently, it gained back its allure, rising to all time highs. However, the company again noted its future growth would be inhibited by government sanctions. The stock sold off on that news. Will the trend remain strong or will this news reverse the trend?
Identifying Trending Stocks
Trend following is a time tested investment strategy. However, these trending candidates always start from somewhere. Here, we will detail ways to analyse news, trend beginnings and endings.
Judging the significance of a news release is not an easy task. Many times information is incomplete. Furthermore, some times news is anticipated, causing a muted reaction. For guidance, investors look to industry analysts. They offer weightings and price targets after significant company events. Stocks begin trending when a number of analysts agree, or all raise price targets together. This creates a flurry or buyers or sellers, resulting in a trending stock.
Conversely, other traders rely on technical signals for identification. These signals are clear and not left open to negotiation like news is. They are binary events. Technical trend followers use entry and exit rules. For example, a strategy is to buy when the 50 day moving average crosses above the 200 day moving average. The same position is closed when the 50 day crosses below the 200 day. A moving average is a trailing indicator of recent price action, averaged for a time frame.
Still other traders use the classic definition of trend. An uptrend consists and higher highs and higher lows. A downtrend consists of lower high and lower lows. Any time this occurs, a trend exists. A simple strategy regarding these rules involved buying new highs, and sell if price breaks below a recent low. Trading trending stocks sounds simple. However, traders have difficulty following the rules of the system consistently.
Trends begin silently, gain attention, the either die out or go parabolic. A trader does not need to be early in the trend to profit. He only must remain in long enough to realize the majority of the move. Trending stock strategies rely on consistent dedication to a plan. If followed, these strategies yield tremendous profits in trending markets.
Finally, stocks trending up usually continue trending up. This phenomenon created the saying “the trend is your friend”. The same is said for stocks in downtrends. Trend traders run into trouble when they over trade, or exit positions prematurely. Identification of trending stocks today and reliance on a trading plan reward trend followers handsomely.