Four NDX Stocks for the Rest of the Year

Up to this point, a handful of NDX components have gathered most of the headlines during the index's dramatic rally off the August lows. Indeed, just three top guns -- Apple , Research in Motion and Google -- have done most of the heavy lifting during this powerful run, with each stock now trading at all-time highs.

Microsoft joined this elite group last week, after strong earnings and a bullish outlook lifted the perennial underperformer to a seven-year high. That surge gave additional footing to the rally, paving the way for a continued uptrend that's likely to last into the first quarter of 2008.

At the other end of the spectrum, Broadcom and Amazon dropped dead weights on the index after poorly received earnings triggered heavy selling pressure last week. Both of these issues had underpinned the big-cap tech rally, but their drubbing tells us to look elsewhere for support while these stocks lick their wounds.

Long-side opportunities in the Nasdaq-100's best performers appear limited right now because the stocks are overbought and in need of a well-deserved rest. So I believe it's time for lesser-known components to step up to the plate and take over the leadership mantle.

Which index stocks might surge and move to the top of the leadership board between now and year's end? Here are four excellent candidates that are sitting under the market's radar, and ready to run as we head into the coldest months of the year.

Biotech stocks have trailed the pack throughout 2007, but Genzyme might step in and save the day. The stock rose to a major high at 77.82 in November 2005 and dropped into a deep correction. Earlier this month, it rallied out of a long basing pattern and jumped back to resistance.

Price then pulled back for a few days, before returning to this key level last Friday. This marks the next phase in an evolving breakout pattern. So when will the stock finally push above the old high? Accumulation is weaker than expected so the latest downswing might carry to 71 before the stock starts its rally run.

Oracle broke out above six-year resistance at 20 in mid-September and ran up to 23. It then announced its offer to buy BEA Systems , triggering a steady selloff that dropped price back to 50-day-moving-average support. It hovered at this price level for eight days and jumped higher on Monday.

This company has the sixth highest capitalization in the Nasdaq-100, which means its price movement will have an outsized impact on the index. A resumption of the September breakout could add considerable support to the rally, especially if investors start taking profits on big tech's marquee names.

Dell Computer has underperformed the broad index for many years, but that could change soon. Dan Fitzpatrick recently noted his distaste for the company, but respect for the price chart. Let me echo his mixed sentiments. I recently bought a vanilla Dell laptop that took the company almost four weeks to build and ship. Hey, folks, this isn't 1995.

The stock broke support in April 2006 and dipped to a five-year low. It's been pressing against that resistance level for the last three months and finally looks ready to break out. The surge could trigger a sustained recovery that carries price into the mid 30s before year's end. That's below its all-time peak near 60, but at least it's a good start.

Verisign rallied to a recovery high at 36 in 2004 and pulled back in a deep correction that found support at 16 during the summer of 2006. The stock then began a slow recovery that reached the old high in July. It sold off with the broad market, but recovered and rallied back to resistance four weeks ago.

The stock has been moving sideways since that time, setting up a multiyear cup-and-handle breakout pattern that could yield substantially higher prices as we head into 2008. But don't jump on board yet because the company reports earnings on Thursday. The volatile reactions we've seen during this reporting season add too much risk to early positions.