Finding Bullish & Resilient Tech Stocks using PSIMON
May 20, 2025
Key Take-Aways From PSIMON
- PSIMON recently labeled all 11 sectors of the S&P 500 in either their low or moderate volatility regimes, indicating a significant reduction in sector risk profiles across the board.
- PSIMON helped us identify VeriSign as a resilient technology stock demonstrating a particularly bullish profile, making it a potentially attractive investment choice.
Steps Followed to Identify VeriSign Using PSIMON
- We first examined the US Sectors in the Market Landscape tool, where we observed that PSIMON classified all 11 sectors of the S&P500 in the low or moderate volatility regimes, indicating a decrease in overall risk levels.
- Given its strong recent recovery, we took a closer look at the tech sector and its component stocks.
- We found the stocks with the highest relative forecast ranks were Microsoft (#1), Intuit (#2), and VeriSign (#3). VeriSign was the first to switch into its low volatility regime, followed by Microsoft a couple days later. Intuit is still in the moderate volatility regime. Before its transition to the low volatility regime, VeriSign had stayed in its moderate volatility regime for the 28 days (since April 4th), showing a strong resilience throughout the US tariff market volatility period.
VeriSign’s high relative forecast rank, along with its resilience to market volatility as indicated by its regime label, suggests it is an attractive investment option. By following the steps outlined above, we quickly identified a stock that showed both resilience to volatility and a bullish behavior.
On Tuesday, May 13, PSIMON moved all 11 sectors of the S&P 500 exclusively in either the low volatility regime or the moderate volatility regime (Regimes 1 and 2 respectively). This was a significant milestone since the disruptions caused by U.S. trade tariffs. At the peak of the correction, PSIMON classified 10 of the 11 sectors in the high volatility regime (Regime 3). The transition of the final sectors out of Regime 3 aligns with the reversion of SPY to Regime 2, signifying a significant decrease in overall risk levels.
The market recovery was particularly bolstered by the robust rebound of the Technology sector. Recently, PSIMON adjusted its relative forecast for this sector to underperform the S&P 500. However, its Conviction Rank remains moderately low at 5/6. As such, a detailed examination of the components within this sector may unveil significant investment opportunities.
Among the Technology sector (XLK), we see VeriSign (VRSN), for which PSIMON forecasts an outperformance relative to the S&P 500 (Relative Forecast) with a high conviction level (3 out of 23, the third highest value among positive Relative Forecasts in the Technology sector). Additionally, PSIMON labels VRSN in Regime 1, thereby indicating a limited risk level for this asset.
The combination of VRSN’s current low volatility regime and its positive, highly ranked relative forecast prompted us to do a more thorough analysis of its business. One of VeriSign’s primary activities is maintaining domain name registries associated with web pages, specifically the .com and .net domains, which are among the most widely used. This business model supports revenue and profit growth, at least for a two to three-year horizon.
VRSN’s operations demonstrate a relatively lower exposure to trade tariffs uncertainties compared to other industries. As illustrated in the following graph, VRSN has consistently avoided the high volatility regime 3 since the imposition of American tariffs. However, the stock price has surged explosively since the beginning of the year, which could lead to a short-term correction and potentially present a reasonable buying opportunity should that happen.
PSIMON’s AI-Driven signals enable investors to quickly identify promising stocks and ETFs in any type of market conditions. Verisign (VRSN) is yet another example of a stock that is worth a closer look.
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