Every strong market has a few highly liquid momentum names that tend to act as leaders. This summer I wrote about Tesla (TSLA), Netflix (NFLX), Facebook (FB) and LinkedIn (LNKD). All four stocks ran up very strongly but they eventually corrected and momentum money moved elsewhere. Of the four, Facebook probably remains the most interesting, but none are the leaders they once were.
While skeptics will tell us that this bull run is a bit long in the tooth, I believe it's still a good idea to identify what stocks are serving as leaders. Being leaders doesn't necessarily make them good buys, but they do give us insight into overall market. When these stocks stop outperforming, the likelihood is that the broader market will also start to struggle.
The new Four Horsemen are:
YY Inc. (YY) is a Chinese social media play.
Canadian Solar (CSIQ) is a leading manufacturer of solar cells and modules.
Yelp (YELP) is an online platform that allows users to find and review local businesses.
Jazz Pharmaceuticals (JAZZ) develops drugs used for the treatment of narcolepsy, cancer, pain and neurological ailments.
None of these stocks present easy entry right now, but they are excellent trading vehicles that should provide insight into the health of the overall market.