Alphabet, Alibaba Lead 5 Hot Stocks Simmering Just Below Buy Points
With the market in a confirmed uptrend, your watch list names this week are five hot stocks that are working on bases and nearing buy points: Google parent Alphabet (GOOGL), Alibaba (BABA), Visa (V), Electronic Arts (EA) and STMicroelectronics (STM). All five have relative strength lines that are all at or near the highs of their consolidations, which is bullish.
In addition to the relative strength line, there are many other technical factors to consider before adding a stock to your portfolio, including volume, base structure and base stage. It’s important to make note of base stages, because later-stage bases carry greater risk.
Alphabet, Alibaba and STMicroelectronics all boast Composite Ratings above 95. The Composite Rating, which runs from 1 to a best-possible 99, combines proprietary ratings on earnings and several other key metrics. All-star winners often have Composite Ratings of at least 95 near the start of their runs.
Visa isn’t far behind with a 93 Composite Rating. Electronic Arts has an 88 Composite Rating.
Google Parent Alphabet
Google parent Alphabet is working on a base with a 1,198.10 buy point, and shares are currently trading about 5% below the entry point. While Alphabet’s base isn’t technically a late-stage one, the stock has surged 95% since an early-stage breakout in 2015. Alphabet could potentially form a handle, with an earlier entry at 1,178.26, but a handle has not yet finished forming.
Chinese internet giant Alibaba is trading 3% below a 206.30 buy point from a consolidation base, with shares getting a boost in heavy volume Thursday on reports that Alibaba is considering a dual listing in China. Alibaba’s base is a third-stage base, which is a later-stage base. Breakouts from first- and second-stage bases are more optimal.
Visa is working on a second-stage base, and shares are less than 1% below the cup-with-handle buy point of 125.40. If and when Visa shares break out, look for heavy volume as that indicates institutional support. Visa is one of several payment-related stocks, including Mastercard (MA), Square (SQ), PayPal (PYPL) and PagSeguro (PAGS), that are performing well.
Chipmaker STMicroelectronics is trading 3.5% below a 25.40 buy point from a cup base. An earlier entry could present itself if a proper handle forms, but one hasn’t yet. STMicroelectronics’ base is in the first stage, meaning it has greater potential to succeed.
Electronic Arts is forming a first-stage base as well in a base-on-base pattern. Electronic Arts shares tried to clear a 131.11 buy point intraday Friday, but hit resistance at that level and turned tail, closing down 0.5% at 128.52.
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