Backtesting over the last several months reveals the new highs strategy works well coming out of a correction. Ran a scan to find the VV industry groups that had the most number of stocks making new 52-week highs on January 16 and January 30 produced the following industries (non-growth industries such as utilities were ignored):
Telecom - Services
Software - Business
Leisure - Services
Computer - Services
Bus Services - Misc
Drugs - Ethical
Cosmetics & Personal Care
Using the Portfolio Builder to construct a portfolio of 10 stocks from these groups using the Bottle Rockets strategy yields a 2 month return of 34% and 35%, respectively.
Stocks in one portfolio were: ANLT, DSTM, NSOL, RXSD, SVR, STRX, and THRX. When one leaves off the Drugs - Ethical and Cosmetics & Personal Care groups and focuses on the top 5, you have: ANLT, DSTM, FSRVF, IDTC, NSOL, PGEX, SAPE, SVR, and STRX. Only RXSD and SVR lost money, less than 10%. Also, those stocks were much higher during the two months also. |
