This 'Magnificent Seven' Stock Hasn't Made a New High in 31 Months

Editor's note: Everyone knows the "Magnificent Seven" tech leaders have been flying high. But according to Vic Lederman – the editorial director of our corporate affiliate Chaikin Analytics – not all of these mega caps are worth buying today. In this piece, published earlier this week in the free Chaikin PowerFeed e-letter, Vic explains why it's important to remain vigilant in today's market – especially if you're looking at these popular stocks.

It's one of the most widely talked about stocks on the market...

And it's one of the so-called "Magnificent Seven" giants...

But it hasn't made a new high in an astounding 31 months.

I'm talking about electric-car king Tesla (TSLA). And considering all the hype around the Magnificent Seven in the financial media, that might be surprising to hear.

This is something that deserves a closer look. So today, let's dive into the details with the help of one investing tool. And I'll explain what this means in the big picture of investing today...

The Magnificent Seven includes mega-cap tech stocks such as Tesla, Apple (AAPL), Amazon (AMZN), Alphabet (GOOGL), Meta Platforms (META), Microsoft (MSFT), and Nvidia (NVDA).

These stocks dominated the market last year. Their average gain was an astounding 111% in 2023. And Tesla was one of three in the group that soared more than 100%.

So it might sound shocking that the stock hasn't made a new high in more than two and a half years. But take a look at the chart...

Sure, Tesla may be the most talked-about name in the automotive industry these days. And it's the clear leader in American electric-car sales.

But over the long term, its share price is suffering. The stock hit an all-time high in November 2021 at about $410 per share. Today, TSLA shares trade for around $196.

And in the first panel below the price chart, you'll notice our proprietary measure of the stock's relative strength versus the S&P 500 Index. As you can see, this measure is sharply in the red.

That means the stock has been underperforming the broad market. In fact, it's down a staggering 21% this year as of Wednesday's close. Meanwhile, the S&P 500 has soared about 15% so far in 2024.

Next, take a look at the Power Gauge rating in the bottom panel of the chart. Our Power Gauge system combines investment fundamentals and technicals. And it produces a simple, actionable rating – "bullish," "neutral," or "bearish."

Not surprisingly, the stock has spent most of this year in "bearish" or "very bearish" territory.

Folks, this is a big deal...

The market is highly concentrated right now. And investors are mainly focusing on the names at the top.

But Tesla is the perfect example of a big name that's struggling. That makes the takeaway clear...

Despite the overall market's surge in 2024, now is not the time to simply buy up the big names and hope for the best.

Today's market demands a conscious and active approach.

That means that picking the right stocks is paramount – now more than ever. And knowing what to do when that market concentration changes could be the difference between making huge returns... or seeing your portfolio wither.

And that's exactly why my colleague and Chaikin Analytics founder Marc Chaikin just came forward to share what could be the single most profitable strategy to build and protect your wealth.

In fact, his strategy has a historical record of outperforming the rest of the market in financial environments just like the one we're seeing right now.

Marc explained everything in a special online event earlier this week. And now, you can watch a free replay of his conversation by clicking here.

Good investing,

Vic Lederman

Editor's note: Marc is a stock market expert with 50 years of experience. Recently, he sat down to share his biggest prediction to date. He has waited decades for the right market conditions to share a little-known strategy... one that can help folks get ahead of the curve. And now, he has finally unveiled it. If you missed his event, don't worry... You can watch a replay right here.

Further Reading

Gold-mining stocks have enjoyed a solid rally thanks to rising gold prices this year. But recently, these gold miners landed in "overbought" territory – which tells us this sector could be ready for a breather... Read more here.

Utility stocks have joined the artificial-intelligence ("AI") mania. And that makes sense... AI operations need a lot of power. But before you buy into the hype, remember – utilities are known as a "boring" sector for a reason... Learn more here.