Increasing profits inspire: A unique prospect for success

A month ago, the Nasdaq chart was in the lower right corner. Tech layoffs were announced and the CEO/CFO/CIO teams braced themselves for a terrible 2023. A month later the market is looking almost silly and is making new multi-month highs. But this is where it gets difficult; They had to buy what no one was interested in by the end of the year.

Hindsight is 20/20 but let me explain.

Check out the 300 worst stocks

So what did you have to buy to do well this year?

Below is one type of stock that has fallen more than 60% over the past year (as of December 31st) and ranked from worst (0010) to best of the worst (0300). I added a series of numbers that keep that sort order. The sort order is based on the scan (0010, 0020, 0030 in the name column) and last year’s worst stock is at the top of the table).

Please note that the red bars in the image below show one-year performance (February 3, 2022 to February 3, 2023) as of February 3, not year-end. Make a note of the name of my scan results folder too!

If we sort the same names by the biggest move up over the past month, we get this picture of the same 300 stocks. The green bars show the percentage change. What I find fascinating is that many of the bottom 300 stocks in the US over the past year have been up 5-10x the index ($SPX = 8%) in the first month of the rally.

To clarify now, I’ve added a second column of numbers to the list below.

• The second row of numbers was the rank of how terrible they were; 0010 is the worst stock and 0300 is the best of the bad group.
• The first column of numbers is the current lead of that group for the same month; 0010 is the best stock and 0300 is the weakest.

C3.ai

To explain it a little further – for C3.ai –

It was 209th stock out of 300. It wasn’t the worst stock of the 300 worst losers, but it was ranked 209th (2090), meaning 208 stocks were worse.

Now C3 is first, so 0010.

coin base

Coinbase was one of the worst 25 stocks (0250 in the second column) but is now at #2 on the uptrend.

It can be confusing, so let me try to explain again.

In the picture above there are two numbers at the beginning of the name.

• The first is the current ranking from best to 300th, represented as (oo10 – to 0300).
• The second is the year’s worst stock, ranked from 0 to 300 (0010 to 0300).

A stock like TREE was the 40th worst-performing stock of the year (0400) and is the top 6 (0060) in this group for best monthly performance — up 106%.

StockCharts has no way of posting the full PDF here, but I’ve posted that same article on ospreystrategic.org and you can download the PDF from there.

I will be giving a presentation to show how we operate during rallies and downturns in the market. If you want to learn more, follow the link to register for free: Osprey strategic briefing.

The bottom line is that when the market turns up, sticking with the “safe” stocks can only result in massive underperformance. I will add this scan to my toolbox for bigger lows.