The MarketSmith Blue Dot Scan finds stocks when two criteria are met: stocks hitting a 52-week high in their Relative Strength line are flagged. A visual cue is then added as a translucent blue dot appear on the Relative Strength line of the stock’s chart. In addition, the stock is added if it is currently building a base.
Summary
If both of these conditions are satisfied, the stock remains on the list for 90 days. You can access the list by clicking on the “Open Stock Ideas” button in the top-right corner on any MarketSmith chart.
MarketSmith Blue Dot
Stocks from the Blue Dot Scan tend to outperform the the S&P 500. These potential stocks will show strength by outperforming the market in any market condition. If the market’s down, good stocks will outperform by treading water and setting up for a bullish run when the market finds support and rises again. In good market conditions, the best stocks will offer the biggest gains relative to other high-performance names.
The second important characteristic of candidates from the MarketSmith Blue Dot Scan is the base, which means you’re not chasing an extended stock that has less potential for short-term growth. Additionally, the best stocks take time to consolidate after sizeable runs. A stock that is in a base will have a clear buy signal as MarketSmith delineates bases with its Pattern Recognition feature.
MGM Growth Properties
Blue Dot Scan Candidate: MGM Growth Properties is a company that stands to benefit from its acquition of large scale casino properties around the United States.
The stock has been consolidating in a descending channel or wedge pattern, while showing signs of a potential break higher as RS Line rises to 87. The recent highs August September 2021 would be a technical breakout at 43.19 should price action surge above that point on above average volume.
“Income investors betting on a return to normal in the last few weeks have been buying MGM Growth Properties (MGP). The company was created in 2016 as a casino-based real estate investment trust, or REIT. The company has whole or majority ownership of 15 casino properties, including MGM Grand, Luxor, Mirage and Mandalay Bay in Las Vegas.”
“All of the properties are owned and operated by MGM Resorts (MGM), which pays MGM Growth Properties to rent the locations.” – Investors Business Daily
MarketSmith Blue Dot Scan Candidates
Silicon Motion Technology (SIMO) is a Taiwan-based designer of micro controllers, universal serial bus flash drives and card readers. The MarketSmith Blue Dot Scan candidate was a top performer in the MarketSmith Growth 250, up 12.88%. at the close yesterday Bloomberg reported the company is considering a sale amid increased takeover interest.
SIMO – Click to enlarge
DRH – Click to enlarge
Diamondrock Hospitality (DRH) is a REIT that invests in premium full service hotels and premium urban limited service hotels, with both stocks showing signs of relativce strength.
Revenue grew 221.7% on a year-over-year basis.
The company earns the No. 15 rank among its peers in the Finance-Property REITs industry group. Rexford Industrial Realty (REXR) and Apple Hospitality REIT (APLE) are also among the group’s highest-rated stocks.
Look for these stocks to follow through on any strength in the general markets.
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Happy Trading,
Vinny
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