For the past few years the leading stocks in the market have been known as the “Fast Five.” They have included Facebook, Amazon, Netflix, Google, Microsoft, and Amazon.
But as you probably know Facebook blew up on earnings last quarter and just hit a new 52-week low last week while Netflix also is now lagging the averages.
Microsoft is still a leader and of course so is Amazon, but Google is not really acting as well as it did before.
What is worse though is many other of the fad momentum tech stocks are no longer acting as market leaders anymore too. Stocks such is INTC are now portfolio millstones.
But the DOW has been acting well and so has the S&P 500 recently.
What has happened is that leadership has shifted into the defense industry, which is now booming thanks to this year’s Federal Budget, that included a big spending increase of money flowing into the defense industry.
Here is the technical analysis stock chart for the most popular ETF of the defense sector ITA.
As you can see ITA soared to new highs last week.
One stock to keep an eye on is Boeing, because it is in the DOW-30 and has been one of the companies that spends the most on stock buybacks.
Boeing stock soared last year, but has been going sideways since January to consolidate.
I would not be shocked if we don’t get a little stock market speed bump next month, but if the DOW rallies into the end of the year you can expect the rally to be led by BA and other defense stocks.
Rockwell Collins broke out to new highs on Friday.
Forget the fad tech stocks, these defense stocks are now where the stock market gains are being made, and if the DOW is going to go to new highs and grind higher it will be BA that leads the way instead of old leaders of past years like INTC and IBM.
Of course simply chasing what goes up the most isn’t my style of trading.
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