As S&P 500, Dow Jones Find Resistance, These 5 Techs With High RS Lines Are In Buy Zones | Stock News & Stock Market Analysis

Futures for the S&P 500 index, Dow Jones industrial average and Nasdaq 100 rose modestly in late trading Thursday after the S&P 500 index closed just below its 50-day moving average, an area where the Dow Jones has found resistance. Meanwhile, PayPal (PYPL) and four chip equipment makers — Applied Materials (AMAT), Lam Research (LRCX), ASML Holding (ASML) and Teradyne (TER) — are holding in buy range with their stocks’ relative strength lines at or near highs.


Payment stocks like PayPal have been performing well, with Square (SQ) and PagSeguro (PAGS) extended and Visa (V) near a buy point. Semiconductors, especially chip-gear makers such as Applied Materials, Lam Research and ASML, helped power the Nasdaq to record highs.

PayPal, Applied Materials and Lam Research are all members of the IBD 50 stock list.

S&P 500 index futures rose 0.3% vs. fair value. Nasdaq 100 futures advanced 0.4%. Dow Jones futures were up 0.2%.

Relative Strength Line

The relative strength line tracks a stock’s performance vs. the S&P 500 index. You want to look for stocks that are outperforming the major averages. Why buy or hold a stock, with all that risk, if it’s merely keeping pace or lagging the broader averages? In a choppy market, a strong RS line is especially important to generate positive returns. An RS line that moves to new highs with or ahead of a stock is a bullish sign and a specialty breakout tool for savvy investors.


PayPal broke out of a cup-with-handle base on Wednesday, clearing an 82.27 entry in volume that was 40% above normal. Shares dipped 0.9% to 82.57 on Thursday. The RS line on Wednesday matched record highs and just ticked lower on Thursday. The RS line is the blue line in the charts below.

Applied Materials

Applied Materials cleared a 58.83 double-bottom base buy point on March 6. Shares closed Thursday at 60.28, up 0.1% and still in the 5% buy zone. The chip-equipment giant’s RS line is just below the late November peak and is easily above its level from the middle of the “W” in the double-bottom pattern.

Lam Research

Lam Research rose 0.2% to 223.08 on Thursday, still in range from a 218.58 double-bottom pattern. Like Applied Materials, Lam’s RS line is just below consolidation highs and above the middle of the “W” area.

Lam Research got a 300 price target from FBN Securities on Thursday, which initiated the chip-gear leader with an outperform rating.

ASML Holding

ASML advanced 1.4% to 214.44 on Thursday, still in range from a 208.68 consolidation entry. The RS line was at a record high at the March 9 breakout and has kept climbing.


Teradyne dipped 0.4% to 49.14 on Thursday, modestly above a 48.63 buy point cleared on March 9. As with ASML, Teradyne’s RS line hit a new high on that breakout. It’s holding at record levels.


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Originally posted 2019-09-19 23:11:03.


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