Tech Stocks Could Soar 20% Over the Next Year

October was a big month for stocks. It was one of the best ever for the S&P 500 Index.

As my colleague Brett Eversole explained recently in DailyWealth, that means more gains are likely ahead. And sure enough, November has been another strong month for stocks, even if things have been shaky in recent days.

But it’s not just the overall market that has done well…

The Nasdaq 100 Index had a huge October too, rising 7.9%. It’s positive by around 2% in November. And even more, this basket of tech stocks is coming off a hot streak.

It recently strung together 10 up days in a row. This is a major sign of strength for the sector. Investors have been driving the market higher, day after day.

Importantly, this signals more upside in tech stocks from here. Let me explain…

The Nasdaq 100 holds the 100 largest stocks from the Nasdaq Composite Index. And as I said, it recently rallied for 10 consecutive days.

That might seem like a random coincidence… something to notice, but not to think much about. But history tells us that’s not the case.

When an investment rallies day in and day out, it means the trend is strong. More than that, it means the trend is accelerating. And we can see that the recent breakout will likely lead to more gains…

Since 1990, there have been 26 similar up-day setups in the Nasdaq 100 Index. And buying after those setups has led to winning trades 93% of the time.

Importantly, we’re coming off one of these right now. It happened at the end of October, as you can see below…

History shows this is an indicator worth paying attention to.

Since 1990, the Nasdaq 100 Index has done incredibly well – returning 15% per year. But setups like today’s have led to even better results…

You can see in the table above that both strategies have led to gains of about 7% in six months. But buying after up-day setups outperforms a basic buy-and-hold strategy in the long term…

Similar cases have led to 20% gains over the next year… with a 93% win rate, as I explained earlier. You can see all of the outperformance happens in the full-year return.

Stocks have been rocky in recent days. But the long-term trend is still firmly up. And in the case of the Nasdaq, we’ll likely see big gains over the next year.

The tech-heavy Nasdaq 100 rallied for 10 straight days last month. It could lead to 20% gains over the next year. And that means investors should strongly consider owning this part of the market right now.

Good investing,

— Chris Igou

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Source: Daily Wealth