New market leadership from the likes of Airbnb stock and Duolingo may provide investors with shelter if tech names might start getting tired even as the stock market rally continues.
Stocks faded from intraday highs but continued their advance on Thursday, boosted by comments from Fed Chair Jerome Powell signaling rate cuts later in the year.
"A market like this is innocent until proven guilty," David Keller, Chief Market Strategist at Stockcharts.com, told Investor's Business Daily's "Investing with IBD" podcast. "You assume the trend is going to continue until you see enough evidence that it changes."
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Keller says that while momentum divergences are raising a question mark with some leading growth stocks, market breadth conditions remain fairly strong.
Airbnb Stock Leads Non-Tech Names To Watch
"It's not really a risk-off move, but more of a leadership rotation if growth sectors like technology start to take a break and industrials and materials start to work," said Keller.
So what should traders do if select tech leaders see relative weakness as strength rotates to other areas?
That's where names like Airbnb stock and Duolingo stock come in. "If you're scanning for stocks making new three-month highs, you're not going to struggle to find them," Keller said. "They're just going to be in different sectors than we've expected."
Duolingo Stock Speaks To Investors
Duolingo stock is riding that change in market leadership, Keller says. The language learning stock is bouncing off support at its 21-day line and nearing a cup-with-handle entry of 241.86, according to MarketSurge.
Duolingo is currently ranked No. 1 in the Computer Software-Education group according to IBD Research, and has an IBD Composite Rating of 97.
On a longer-term chart, Duolingo is potentially building a three-year cup-with-handle since the stock's market debut in July 2021, Irusha Peiris, portfolio manager at O'Neil Global Management, tells Investor's Business Daily.
Airbnb Stock To Provide Shelter?
Recent action in Airbnb stock also looks compelling as shares continue their largely upward march following a 28-week consolidation that began last August. The stock formed an inverted head-and-shoulders pattern during this period, Keller says. That pattern is usually seen as a bullish signal.
The short-stay home rental service has been involved in some controversies over its listings. Most recently, Airbnb changed its policy to ban security cameras and devices in any indoor areas of a property.
Airbnb stock is currently ranked No. 5 in the Leisure-Travel Booking group according to IBD Research. The stock has an IBD Composite Rating of 88.
"Airbnb stock shows this nice rotation, in a lot of ways like Duolingo, where you've gone from downtrend to uptrend," Keller said.
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