The broad market, as represented by the S&P 500, appears poised to break to new highs. This is supported by price action, internal indicators and sentiment numbers. AAII recently reported that its members’ optimism is below normal, saying, “More individual investors remain pessimistic than optimistic about the short-term direction of stock prices.” Since this is a contrarian indicator, the report is bullish, and so, along with the tape action, the weight of evidence is still in favor of the bulls. New long trading strategies can be initiated, but chasing stocks that have made huge gaps up is probably not the best course of action.
This month’s list of stock to buy is populated with names that are in powerful bull markets. If the broader market breaks to new highs, these stocks should participate. But as we enter the annual period when volume falls and trading tends to slow, volatility increases and market corrections become more likely. Thus, wise investors should decide what prices they are willing to pay for these top performers and enter buy orders at those prices.
Here are your top stocks to buy for May: