With the uptrend firmly intact for all major indicies, the market remains in the hands of the bulls. The gap down on 3/6 appears to be nothing more than a one-day sell-off, as distribution days have been scarce. With the SPX's 10-day moving average above the 20-day MA above the 50-day MA, the only option is to look for potential long candidates. Uptrends can last far longer than many expect, and there is no evidence to suggest this rally is nearing an end. With that said, here are the top stocks on my watchlist going into next week:
After gapping up on 5x average daily volume on 2/14, RAX has spent the past month consolidating between 51 and 57. This basing action has worked off the stock's overbought condition, as it has corrected through time rather than price. The reversal to the upside on 3/6 shows buyers were eager to load up on a pullback, and there has been no significant selling within the current base. Given the stock's recent explosive move, this basing action is particularly impressive, as it demonstrates how investors are unwilling to dump shares even after a substantial advance. RAX breaks out to new highs above 57, which is where my alert is set.
Besides its healthy basing action right below all-time highs, VFC has another major positive on its side -- it hails from a very strong industry group. Many luxury apparel stocks have seen strong price action recently, as the job market recovers and consumers feel increasingly confident in their financial well-being. VFC's 5-week base has seen very tight trading, as the stock has only corrected 4% off its high in the current base. Volume on up weeks has dwarfed the volume on down weeks, showing institutional accumulation. I'm watching for the stock to break over 150.
After undergoing some selling pressure in late January and early February, FTK has spent the past month climbing up the right side of its base. Volume patterns over the past couple of weeks have indicated that the initial selling has subsided, as shares transfer from weak hands to strong hands. The $10-level brought out buyers, and more recently the 20-day moving average provided support on Wednesday and Thursday of last week. I'd look to buy the stock over 12.70, while potentially adding if it can clear 13.70.
I provided a longer-term chart of NTES to illustrate the massive base that the stock is threatening to break out of. Since bottoming in October of last year, NTES has put in progressively higher lows, as investors have been willing to snatch up shares on pullbacks. Over the past five days, the stock has based between 53.40 and 55, with the upper range coinciding with all-time highs. Stocks basing right below new highs always find their way to the top of my watchlist, and NTES is no exception -- I'll be looking for a high-volume move over 55 to get involved.
The current 5-month advance for WCC has featured multiple strong-volume up days, while any real selling has been virtually non-existent. The stock has been basing for the last six weeks as it digests its gains. The 50-day moving average provided support on 3/6, and WCC looks poised to continue its advance on a breakout above 67.40.
Feel free to leave any thoughts in the comments section below, or at my twitter page (@CommAveTrader).
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