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Workday, Red Hat, Electronic Arts, Paylocity, Take-Two Are In Buy Zones Or Will Be: S&P 500 Futures | Stock News & Stock Market Analysis

Futures for the S&P 500 index edged higher late Tuesday after the major averages suffered their worst losses of 2018. But Workday (WDAY), Electronic Arts (EA), Take-Two Interactive Software (TTWO) and Salesforce.com (CRM) rose modestly Tuesday or fell less than the S&P 500’s 1.1% retreat. Red Hat (RHT) matched the S&P 500’s decline.

X Even better, Workday, Salesforce.com and Red Hat are all in buy range. Electronic Arts and fellow video game maker Take-Two Interactive closed Tuesday slightly below entry points, but rallied in extended trading on EA’s earnings report and guidance.

S&P 500 index futures rose 0.1% vs. fair value.

Workday

Workday rose 3.2% to 120.26 in Tuesday’s stock market trading after Morgan Stanley upgraded the cloud-based business software firm and William Blair said it recently won two big financial-software deals. That move pushed Workday to the edge of a buying range from a 111.98 cup-with-handle entry point. But it was the first time Workday’s breakout seemed impressive.

The initial Jan. 23 breakout came on volume that was well below average, and it remained light for the next several sessions. Also, the relative strength line, which tracks a stock’s performance vs. the S&P 500 index, was lagging. Even as the stock moved into all-time highs, the RS line remained stuck below even short-term peaks.

But on Tuesday, trading volume was 51% above normal. And with Workday posting a big gain on a bad market day, its RS line rose to a two-month high.

Salesforce.com

Salesforce fell 0.9% to 112.23, a modest loss on below-average volume. The maker of on-demand customer relationship software is comfortably above a 109.29 flat-base buy point. Salesforce initially cleared the entry point on Jan. 12, but volume was only 25% above normal. That’s OK, but you’d really like to see a 40%-50% minimum gain as a sign that institutional buyers are stepping in. The next session, the stock fell back below the entry on similar volume. Salesforce then retook the entry, but on a series of low-volume moves.

Also, Salesforce’s RS line really hasn’t made any progress from short-term levels since the breakout.

Red Hat

Red Hat broke out past a 131.03 flat-base entry on Jan. 25, then rose to near the top of the 5% buy zone the next session. Shares have pulled back the last two sessions, including Tuesday’s 1.1% on volume that was 34% below normal.

The Linux software firm’s breakout came on volume that was just above average. The RS line has not made much improvement since then.

Electronic Arts

Electronic Arts closed up 0.9% to 118.70, working toward a 112.89 buy point. After the close, the video game maker met fiscal third-quarter earnings estimates and fell short on revenue. But EA guided higher for the current March quarter.

EA shot up 6.1% to 125.97 after hours, suggesting a breakout into a buy zone.

Keep in mind that extended trading does not always translate into how a stock will open and close the following session.

Also, EA’s RS line is well below where it was at the start of the five-month consolidation, though it did top a very short-term high this week. Hopefully, EA’s after-hours action does carry over to Wednesday with a high-volume price spike.

Take-Two Interactive Software

Take-Two fell 0.8% to 118.31 on Tuesday. The stock has topped a 120.28 buy point from a handle in the last two sessions, but failed to close above it. Take-Two rallied late Tuesday in sympathy with peer EA, climbing 1.4% to 120, just below the entry.

Take-Two’s RS line has some distance to the consolidation’s highs, but a solid breakout would give it at least a short-term high.

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