Imperva Inc (IMPV) made a steady move higher from April through July before consolidating in a very bullish ascending triangle continuation pattern over the past four months. On Tuesday, volume accelerated and triangle resistance near 74.00 was cleared as IMPV extends its prior uptrend. The measurement of this pattern is from the bottom of the triangle in late August (53.00) to the top of the triangle (74.00), or 21 points. Once we see the breakout on heavy volume, the target becomes the breakout level (74.00) plus the measurement (21 points), or 95.00. Best entry on a breakout of this nature is during a retest of prior price resistance (now price support) near 74.00 with a potential second entry at the rising 20 day EMA, currently 71.59. Recent November lows would serve as key price support to watch in the near-term. Here's the chart:
New Oriental Education and Technology (EDU) has been a high-flying stock before. StockCharts.com moved it into the Mid Cap Group for an SCTR ranking and that has currently surged to 99.3. That is a really strong ranking and we can see it made new 52 week highs in mid-October. After building a 6-year consolidation between $18 and $30, the stock looks primed to breakout to the topside if it can get through this last bit of resistance. The breakout in January 2014 quickly stalled and rolled over.
After lagging the market in October, the Home Construction iShares (ITB) is perking up with a breakout on the price chart and upturn in the price relative. ITB peaked in August and fell into September. Even though the market rallied in October and early November, ITB did not partake and continued to underperform as the price relative (ITB:SPY ratio) continued lower. There was a lot of consolidation in the 26.5-28 area as the two moving averages converged and the ETF broke out with a surge the last eight days. The uptrend is resuming and the lows extending back to mid October now mark support. The price relative also turned up as ITB outperformed over the last few weeks.
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First Solar (FSLR) looks very interesting here. This stock has been down drafting on the back of lower energy across the industry group. However, it might be time to think about FSLR above $60. The SCTR is back above 75 so it might have the momentum to break out.
The overall trend for Alcoa is currently down, but the ETF is showing signs of life with a bullish reversal pattern taking shape. The chart shows AA making a round trip from 8 to 8 with a double top at 17 in between. Chartists can apply the inverse logic of the double top to the current situation because a double bottom is taking shape. The first low formed in August with a long hollow (white) candlestick and bullish engulfing pattern. The second low formed with a piercing pattern as the stock opened below the prior candlestick low and closed above the mid point of the filled (black) body. Thrown in a long consolidation in the 8 to 9 area in 2013 and there is lots of evidence for support here.
After gapping up off its recent uptrend, the buying continued on Intel (INTC) intraday on Friday as it surged to a high of 35.29. By day's end, however, INTC closed at 34.66 - EXACTLY where it closed on its recent high on October 23rd. Volume was very strong but leaving a long tail above resistance and failing to close above it has short-term bearish implications. A filled candle would have been worse because that would represent a close below the open. At least on Friday the bulls had a hollow candle with a higher close than open. Still, INTC will open the week with much work left to do, a reversing candle and nearing overbought conditions. Take a look:
Abercrombie and Fitch (ANF) popped above an 8 month base in what can only be described as a breakout. The apparel retailer industry group only had one stock with an SCTR above 65 yesterday. What a difference a day makes. Now Abercrombie is leading the group. Abercrombie literally jumped to end the building of the 2015 base in the price chart. The volume soared, the SCTR went above 90 and the base looks complete. The SCTR had been working higher and the move today appears to confirm the change in investor sentiment towards the stock.
The Dow Jones U.S. Home Construction index ($DJUSHB) hit its highest level in two months this morning and a close above 600 would likely signal more strength to come. DR Horton (DHI) and NVR, Inc (NVR) represent two of the strongest stocks in the group technically and are both poised to lead the rally subsequent to a breakout. While the 10 year treasury yield ($TNX) is a proxy for mortgage rates and has been up sharply since late October, traders are apparently focusing much more on the reason for a rate hike - a potentially strengthening economy. Below is the current technical state of home construction, along with the bullish chart patterns of DHI and NVR:
The PerfChart below tells the story for the Dollar, Treasury bonds and commodities since late September. Note that stocks, the Dollar Index ($USD) and the 10-YR Treasury Yield ($TNX) are down, while the 10-yr Note ($UST), Spot Gold ($GOLD), Spot Crude ($WTIC) and Spot Copper ($COPPER) are down. It is a classic relationship at work: commodities suffer when the Dollar rises. Normally, bonds tend to rise when commodities decline because this is disinflationary. However, it looks like the bond market is making an adjustment to Fed policy, or rather perceived Fed policy because nobody really knows what the Fed will do in December.
Southwest Airlines (LUV) has been one of the few airline stories where investors have been able to make money since 2012 from buy and hold. Through the summer of 2015 Southwest had one of its biggest selloffs in 3 years. Some of the airlines are trading around their 200 DMA but Southwest is well above on every metric. The long term chart looks great with the price tucked up top right on the chart.