As the stock market has rallied for four straight months, some IBD 50 stocks have not had the rest period or pullback needed to form new bases. Investors may feel giddy as their stocks soar, but frustrated because there are fewer opportunities to buy.
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The few, most recent, IBD 50 base breakouts have been mixed.
Stock Market Rally: IBD 50 Stock’s Breakout Fails
Ryan Specialty Holdings (RYAN) broke out of a cup base with a 50.64 buy point on Feb. 28, following the insurance company’s higher-than-expected fourth-quarter earnings and sales report the evening prior.
The breakout worked as the stock climbed to an all-time high on Friday, bringing its gain around 29% thus far this year. But shares now are extended from the 5% buy zone reaching to 53.17, according to MarketSurge pattern recognition.
Samsara (IOT) broke out of a base in heavy volume on March 8, after the company beat fourth-quarter earnings and sales estimates. The breakout failed and the stock is back below the 36.91 buy point.
Meanwhile, AeroVironment (AVAV) soared 28% in heavy volume and broke out of a cup base with a 143.99 buy point on March 5, after the drone maker topped its fiscal third-quarter profit and sales estimates. The stock, however, has given back most of that gain and is back in the buy zone.
Look For These Setups To Get In
When stocks go up without a pause, investors need to look for alternative buy points if they want to get in a hard-charging stock. Buying off a bounce off the 10-week moving average or from a three-weeks tight pattern can allow for follow-on buys.
But even these setups and breakouts aren’t foolproof in the stock market.
Vertiv (VRT) successfully advanced from a three-weeks-tight pattern with a 65.56 entry the week of March 1. It also bounced off its 10-week line at 55.04 if you were quick with the trigger.
Taser maker Axon Enterprise (AXON) formed a three-weeks-tight formation with a 274.78 entry. Support at the 10-week line in February offered alternative entries. Shares reached an all-time high on March 4 before taking a break.
Natera (NTRA) also formed a three-weeks-tight pattern in February, with a 71.74 entry. Shares gapped up 13% in heavy volume after the prenatal genetic testing company reported a smaller-than-expected loss and revenue that topped views for the fourth quarter. It also offered a strong 2024 revenue outlook on Feb. 28. The stock is forming a new three-weeks-tight formation.
On the other hand, Salesforce (CRM) broke out past a three-weeks-tight with a 298 buy point on Feb. 26. It popped to a 52-week high on March 1, two days after its fourth-quarter earnings report. The customer relationship management stock couldn’t hold the higher level and is back below the buy point.
Follow Kimberley Koenig for more stock news on Twitter @IBD_KKoenig.
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