Futures for the S&P 500 index were virtually unchanged late Monday. Several highly rated stocks cleared buy points on during Monday’s regular session: Nvidia (NVDA), Universal Display (OLED), Arista Networks (ANET), IPG Photonics (IPGP) and Entergis (ENTG).
XAll five stocks have Composite Ratings of 95 or better: Nvidia and Entergis have 97 Composite Ratings, Universal Display a 98 CR while Arista Networks and IPG Photonics have a best-possible 99. All-time stock winners often have a CR of at least 95 near the start of their runs.
But another crucial factor is the Relative Strength line, which tracks a stock’s performance vs. the S&P 500 index. You want to see a stock’s RS line lead or at least confirm a breakout. Such breakouts are more likely to succeed because they highlight the true market leaders.
But this is hard to find in the current steady, strong uptrend, when even top stocks become laggards when they pause for even short, proper bases. The upshot is that about the only way in the current environment for a stock’s RS line to confirm a breakout is if the breakout surges beyond the buy point and the old high.
S&P 500 index futures were flat vs. fair value. Nasdaq 100 and Dow futures rose a fraction.
IPG Photonics
IPG Photonics shot up 6.8% to 258.77, barely within range of the 248.33 buy point of a cup without handle in volume that was 69% above volume. The fiber laser maker’s RS line almost hit a new high on a daily chart, and did hit a new high on the weekly chart.
Arista Networks
Arista Networks, the other 99 Composite Rating stock, almost achieved this. The stock popped 6% to 251.03, hitting a new high in strong volume. As today’s The Big Picture points out, Arista looked like a cup-with-handle base with a 241.60 entry, but was one week short of seven-week minimum. So it’s classified as a cup-without-handle, with a 245.75 entry.
That has implications for the RS line. Arista’s RS line is now above where it was at the top of the psuedo-handle, but still has some ways to go to hit a new all-time high.
Nvidia
Nvidia climbed 3.1% to 222 in solid volume on several CES-related autonomous driving deals, but did not blast past a 218.77 buy point. As a result, the RS line is still modestly below its old highs.
Universal Display
Universal Display shot up 8.7% in more than double normal volume, rebounding from its 10-week moving average to 194.85, pushing it above a 192.85 entry, by about 1%. Like Nvidia, Universal Display’s RS line was a little below its old high.
Entergis
The chip-equipment maker’s stock rose 2% to 33.40, slightly past a 33.15 flat base. That wasn’t enough for the RS line to confirm the move, which came on volume that was only 3% above normal.
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But the pattern is only six weeks long, while
Arista’s week5ly chart might look like a cup-with-handle base with a 241.60 buy point, but the base is only six weeks old — too short for a proper cup-with-handle pattern. Thus, it needs to be viewed as a cup without handle, with a 245.75 entry.
Originally posted 2018-01-09 01:34:45.
