Whenever the stock market comes out of a major correction new leaders emerge. These new leaders tend to resist the decline and bottom out before the general stock market does. In addition they are seldom the same leaders in the previos advance. In the bull market of 2012-2015 we saw leaders from the social media group , FB; the security group PANW, and the alternative energy group (TSLA). So where are the leaders of the new advance likely to come from?
If you were in the market during the internet bubble of 2000 you will for sure remember the high flying fiber optic group with JDS uniphase, Ciena, and Avanex among others. Recently the fiber optic group has defied the correction making new highs and reported positive earnings surprises. Stocks such as Lumentum Holdings (LITE), Viavi solutions (VIAV) and Oclaro (OCLR) reported positive and accelerating earnings pushing them to near new highs. These stocks are not unknown since LITE and VIAVI were formed by splitting of JDS uniphase and Oclaro is none other than Avanex.
With the sector staying 15 years in the dumps, it is understandable that investors are suspect of the latest earnings and we need to see another one or two quarters of accelerating earnings before large funds commit to these stocks. Be sure you keep an eye on these stocks and this sector since this may be the start of a multiyear bull run.
I have posted the chart for LITE to illustrate my point but you can check the charts for OCLR and VIAV and see similar behavior
