Signs of Strength
Last week, I noted that many constructive bases were starting to appear on my radar. This week, we saw many growth stocks either continue constructive action or break out on strong volume. $SPCE saw heavy volume come in as it retook its 50-day moving average. $PLUG had a strong move off the 50-day moving average. $SEDG retook the 50-day moving average on strong volume before breaking out to a new high. Chinese stock $NIO is also setting up extremely well, as are Beyond Meat, DataDog, $NOVA, $ROKU, and $APPS.
$EXPI and $BLDP were two other stocks that had fantastic action around the 50-day moving average. Finally, $TTD made a new high on volume and Pinterest continued its strong uptrend.
Early Friday morning, the main headline was that President Trump had tested positive for COVID-19. After opening lower, many growth stocks closed near the upper end of their range, factoring in that the President likely to experience a full recovery and appears to be doing better. From a technical standpoint, it is always a good sign to see stocks close near the upper end of their range after a gap down on worrisome news.
I'm also seeing some great action in other growth names. ServiceNow, $NOW, is closing in on a new high. I really love the way this one has held its 10-week moving average over the past six months, as it shows a willingness of investors to step in and support it as it pulls back.
Netflix is also shaping up well after a shakeout last month.
Livongo Health, $LVGO, is also really tightening up. It's just incredible how this one has not experienced a close below the 10-week moving average since March. It's really holding up remarkably well over the past six weeks, despite having such an enormous move higher earlier on in the year. This is definitely one worth watch for a breakout in the coming weeks.
Fastly, $FSLY, has also been basing the past three months and has the possibility of really moving if it can breakout above the critical $100 range on volume.
Avantor is also forming a beautiful looking base.
While there are many variables ahead for the next month (the President's health, the outcome of the 2020 election, COVID19, etc.), from a technical analysis standpoint, growth stocks are showing signs of strength. It is quite possible that we may see a strong move higher in the fourth quarter as hedge fund and mutual fund managers buy growth names in an effort to make up for poor performance earlier in the year. We shall see.
Full Disclosure: I currently own many of the stocks mentioned in this post.
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