4 Growth Themes and Plays


Every two weeks, the Briefing Trader team at Briefing.com meets to discuss their outlook on the market, trading conditions, and to review specific investing and trading ideas. Here, they highlight several growth ideas that are starting to crop up on their Relative Strength lists.

Trading is again dominated by headline-driven noise, as Obama, Reid, and Boehner attempt to influence public opinion and pressure the other side through statements to the media. These statements do move markets; you just have to remind yourself that this is all noise until the endgame comes much clearer into focus.

Aside from that, here are four observations related to recent market action:

1) Housing-Related Stocks Are Still the Clear Leaders, But This is Not a New Trend
While the outperformance in housing-related stocks may seem to be a more recent trend that emerged over the past few months, as the chart below shows this outperformance is actually a pretty mature theme, as it's been going on for more than a year. The reason why it's getting more attention now is because of the recent acceleration of this trend since August, which is around the time that tech began to implode and the housing data started to come in unambiguously strong.

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The point here is that while housing's relative strength is very clear, many of the leading stocks in this group have been running for a year or more so the ride could get bumpy in the near-term as profits are taken.

2) Some of the Dogs Are Finally Having Their Day
After forming similar bottoming patterns during the summer and early fall, money has flowed aggressively into such left-for-dead big-caps such as RIMM, NOK, FSLR, and CREE.

Investors need to consider these on a company-specific basis though, rather than drawing broader conclusions. RIMM is a value trap—the smartphone platform war is over, and Blackberry 10 is not going to save the company. NOK is in real trouble unless the recently-released Lumia 920 turns out to be an unexpected success (or Microsoft just buys them).

FSLR and CREE are more interesting, though. FSLR has done a good job weaning itself off government subsidies and focusing on private-sector or local projects that aren't dependent on government hand-outs.