We’re at an interesting point in the market cycle. On the one hand, we’ve seen a really strong performance from the NASDAQ so far this year. While mega-cap tech stocks have powered a bulk of that move, high-growth stocks have shown quite a bit of momentum lately.
It’s important for the market rally to broaden out and include more stocks and more sectors. To see high-stocks stock fetch a bid is an important “risk-on” observation, but it’s key for that bid to remain in place.
It doesn’t do any good — for the market or for sentiment — if this group acts as a flash in the pan with a quick rally, then fizzles out into nothing.
We’re in an interesting market cycle as we enter the seasonally weak period of the year (that being August and September). However, if the market can avoid getting steamrolled, weakness over the next couple of months could actually set up the markets for a solid performance in the seasonally strong fourth quarter.
With that in mind, let’s look at a few of the top high-growth stocks with solid technicals.
Innovation ETF (ARKK)
Many investors consider the ARK Innovation ETF (NYSEARCA:ARKK) a proxy for growth stocks — and with good reason. The ARKK ETF was a leadership name among growth stocks in the last bull market, although it has certainly paid the price for its role in the prior run-up.
Tesla (NASDAQ:TSLA), Roku (NASDAQ:ROKU) and Coinbase (NASDAQ:COIN) are the top three holdings in the ETF. Zoom Video (NYSE:ZM) and Block (NYSE:SQ) round out the top five.
The ARKK ETF has been trading incredibly well, recently (but temporarily) pushing above the $50 level. Now pulling back, the ETF is entering a critical area on the charts near $45. Not only was this area near the first-quarter and second-quarter highs — which were at $45.46 and $45.43, respectively — it also marks the 10-week and 50-day moving averages.
Bulls would love for a dip to this area to hold as support, setting up a potential bounce back up toward $50.
The Trade Desk (TTD)
The Trade Desk (NASDAQ:TTD) has been trading incredibly well. In fact, the stock has rallied in every month of 2023 so far, gaining more than 120% from the January low to the July high.
At its recent high, shares were down “just” 20% from the all-time high. While that’s not the best performance out there, it’s among some of the best price action we’ve seen from high-growth stocks.
That’s as we’re dealing with a very high-quality company. Analysts expect more than 20% annual revenue growth in 2023 and 2024, and earnings growth to approach 20% this year and next year. Keep in mind that The Trade Desk remained profitable through 2020 and 2022, too.
As for the charts, perhaps the 21-day moving average will hold as support. However, if we see a larger correction down to the $77 to $80 area, bulls should take notice. Specifically, that’s the prior breakout area, as well as the 10-week and 50-day moving averages.
SoFi Technologies (SOFI)
The market wrote SoFi Technologies (NASDAQ:SOFI) off. Not only was it a growth stock and thus an easy target for sellers in the bear market, but it was a name tied to student loans as well. When student loans were suspended, uncertainty clouded SoFi — and we all know how the market hates uncertainty.
In any regard, the stock has recently found its groove.
Shares narrowly avoided making new all-time lows in mid-May, but quickly caught fire after that. The stock bottomed at $4.45, then rallied in eight of the next 10 weeks. In that span, SoFi stock has more than doubled.
Despite that performance, shares remain 66% below the all-time high — (see what I mean about TTD stock now?).
While SoFi stock had a positive reaction to earnings, shares are back under pressure in the short term. I want to see if the stock can hold the $10 area. If so, the $11.75 area could be back in play — the post-earnings highs.
If the selling pressure really picks up and drives SoFi back down into the $8.25 to $8.50 area, then bulls ought to perk up, as this could be a huge buy-the-dip opportunity. This is the prior breakout zone and the 10-week and 50-day moving averages.
On the date of publication, Bret Kenwell held a long position in TTD. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
