The all-time high list is a raw data point, which could be enormously useful if you know how to read it properly.
The all-time high list is basically a short-cut into the minds of people, who can create and sustain trends. When the list is small and occupied by defensive names – utilities, healthcare, high-dividend payers – it is usually not the best time to be aggressive and expand your market exposure. When the list is rich, expanding into different high-growth industries like tech and retail, it is safer to take on more risk.
Not every all-time is a buy signal. There are three things to look for that will improve the odds of success:
– breaking out from a proper base (the definition of proper depends on your time frame of operation; usually, the longer, the better)
– immediate catalyst (usually earnings related)
– high volume on the day of the breakout (sign of institutional participation)
Today, 78 stocks gained at least 1% to close at all-time highs. Here are 3 names with relatively recent breakouts on a daily time frame: