2018 ushers in the dash-for-trash trade, and Bespoke's Paul Hickey sees more gains ahead

It appears the dash-for-trash strategy is already paying off for investors in the early days of 2018.

"Losers have been doing well," Bespoke co-founder Paul Hickey said Monday on CNBC's "Trading Nation." "The 20 best performing stocks as of the end of Friday were down a median of 11 percent last year."

The so-called Dumpster diving is affecting about a quarter of all stocks in the S&P 500, according to Hickey.

"What it's telling you is that investors are buying anything that hasn't already rallied just in hopes of catching a move higher," he said.

He points out that Advanced Micro, Scana and Advanced Auto Parts have seen the biggest gains in the first week of trading.

Hickey delivered his assessment as the S&P 500 and Nasdaq were working to end the trading day at record highs. The Dow hit an intraday all-time high for its fourth record of the year. But it couldn't muster enough momentum to close in positive territory.

Despite the mixed close, stocks have been ripping. The major indexes are having their strongest start to the year since 2006.

"Every year where we've had more than a 2 percent gain to start the year, the rest of the year has seen a return of over 10 percent," he said.

Hickey contends the 2017 winners, such as technology, will continue their winning streak. But another group of stocks may have a tougher time this year.

"The middle decile of stocks as far as performance last year are barely up this year," he noted — suggesting they're exhibiting signs of "middle-child syndrome."


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Trading Nation is a multimedia financial news program that shows investors and traders how to use the news of the day to their advantage. This is where experts from across the financial world – including macro strategists, technical analysts, stock-pickers, and traders who specialize in options, currencies, and fixed income – come together to find the best ways to capitalize on recent developments in the market. Trading Nation: Where headlines become opportunities.

Michael Santoli

Michael Santoli joined CNBC in October 2015 as a Senior Markets Commentator, based at the network's Global Headquarters in Englewood Cliffs, N.J.  Santoli brings his extensive markets expertise to CNBC's Business Day programming, with a regular appearance on CNBC's Closing Bell (M-F, 3PM-5PM ET). In addition, he contributes to CNBC and CNBC PRO, writing regular articles and creating original digital videos.

Previously, Santoli was a Senior Columnist at Yahoo Finance, where he wrote analysis and commentary on the stock market, corporate news and the economy. He also appeared on Yahoo Finance video programs, where he offered insights on the most important business stories of the day, and was a regular contributor to CNBC and other networks.

Follow Michael Santoli on Twitter @michaelsantoli

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