Futures for the S&P 500 index rose slightly after the S&P 500, Dow and Nasdaq composite suffered a bearish reversal from all-time highs during the regular session, closing lower. Several leading stocks — including ASML Holding (ASML), Atlassian (TEAM), Align Technology (ALGN) and Scientific Games (SGMS) — tried to break out but closed below buy points.
X Align Technology and Scientific Games closed in the middle of Tuesday’s range, while ASML and Atlassian closed in the lower half, though off session lows. But all four stocks closed higher, giving these stocks a day of outperformance vs. the S&P 500 index.
Separately, Taiwan Semiconductor Manufacturing (TSM) nearly reached a buy point, closing near the top of its range.
Keep in mind that several of these stocks are in late-stage patterns. Also, ASML reports earnings very early Wednesday morning, while Atlassian is on tap Thursday. So is Taiwan Semiconductor.
S&P 500 futures rose 0.1% vs. fair value. Dow futures climbed 0.15%, while Nasdaq 100 futures dipped 0.15%.
ASML Holding
Dutch chip-equipment giant ASML gapped higher, rising to a record 189.38 in Tuesday’s stock market trading, clearing a 186.47 cup-base buy point. But shares pulled back to close up about 3% to 186.38. Aggressive investors might have used 184.27 as an alternative entry just above a too-short handle.
ASML’s relative strength line rose above a short-term high, though it is still well below its highs from the left side of the base. The RS line tracks a stock’s performance vs. the S&P 500 index. You want to see a stock’s RS line lead or confirm a breakout by rising to at least short-term highs.
ASML has earnings before the market open. EPS should fall 3% to $1.25, with revenue rising 22% to $2.5 billion.
IBD’S TAKE: Buying or holding a stock can be risky heading into an earnings report. Here’s an earnings options strategy that can help you cash in on post-earnings stock gains, while minimizing the risk from a weak quarter. Here’s how to apply that earnings options strategy with Atlassian.
Atlassian
The collaboration software maker surged to 55.25 in the morning, powering above a 53.55 cup-base entry. Shares then reversed sharply, briefly turning negative before closing with a 0.5% gain at 52.82. That was not a good afternoon for Atlassian. Still, the RS line is right at a short-term high and made up some ground vs. record highs from two months ago.
Align Technology
Align briefly got to 268.17, moving slightly past a 266.51 cup-base entry. Shares closed up 2.2% at 263.88. The Invisalign braces maker’s RS line has been rising sharply in recent weeks, though it’s still off its consolidation’s peak.
Scientific Games
Scientific Games, which makes lottery-related products, edged up 0.5% to 54.10 after touching 55.15 intraday, eking past a 55.05 flat-base entry intraday.
Taiwan Semiconductor Manufacturing
Taiwan Semi rose 2.5% to 42.23 on Tuesday, approaching a 42.67 buy point from a short cup-with-handle base. However, Taiwan Semi’s RS line is still below a short-term high, let alone its late-November base.
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