This week is characterized by sinking stocks, at least in the first half of the week, as well as a stabilizing market (so far) on this Thursday. Situations like these lend themselves very well to search for stocks that "test support," especially when they are in a sector of the market that is showing strength vs. the benchmark.
The scan that I use (loosely) to to find stocks that test support is the "Turtle Soup" scan, which I have used a few times in the past. At yesterday's close (10/2), this scan returned 61 stocks. Because the number of stocks on the RRG chart is limited to 50, I save the resulting stocks to a chartlist, then sort the list on SCTR value and select "view as" RRG.
This gives me the top 50 stocks, if the list holds more than 50 names (like yesterday), on a Relative Rotation Graph. As I am looking for stocks that are "dipping" within a longer-term rising trend, I remain with the weekly time frame for this RRG and start looking for stocks that make interesting rotational moves.
One of the stocks that catches my attention is CCI, Crown Castle International Corp. The recent move into the leading quadrant from weakening and the strong RRG-Heading are two reasons for this, but the fact that CCI is a Real Estate stock makes it extra interesting as XLRE is one of the strongest sectors within the S&P 500 at the moment (see the RRG here).
So, to recap, what we have here is a stock that is testing support (i.e. it shows up in Turtle Soup scan) while it is at a strong weekly RRG heading in a sector (XLRE) that is showing a strength vs. the S&P 500.
If you were already looking for buying opportunities in Real Estate stocks in order to jump on board the current rotation for that sector, CCI should definitely be on the list for further inspection.
Julius de Kempenaer
Senior Technical Analyst, StockCharts.com
Creator, Relative Rotation Graphs
Founder, RRG Research
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