In the spirit of relentlessly searching for better solutions, I've been thinking about new ways to combine some of the things we talk about when screening stocks, namely Relative Strength, Beta, and stocks that are at or near their highs. Relative Strength is a measure of how well a company's stock is performing relative to the rest of the market. I use a software program called TeleChart 2000 to filter for all of this stuff, by the way. It allows me to sort and search on a lot of different things. In order to search for high relative strength stocks, I merely sort the entire universe of stocks they have by the 26-week return percentage.
Beta is a measure of a stock's volatility.
High-beta stocks generally do much better than the total market in good times and much worse in bad times. Low-beta stocks generally have less of a reaction than the general market in both up and down times. My premise is that the market historically rises, so owning high-beta stocks might be a good idea. Stock at or near their highs is not a new idea. The thought here is that stocks hitting new highs are in favor with investors and, as an extension, perhaps they are doing all the right things with their businesses.