MarketSmith “break out” alerts suggest underlying strength, despite the geopolitical noise. To put it another way, until our MarketSmith and IBD breakouts start failing massively, it is hard to imagine how the equity markets will pull back markedly in the short-term.
Since the October low, our INBOX has received no less than 5 to 6 MarketSmith breakout alerts, while averaging 10 per day. Since the beginning of the year, the pace has picked up again. Here are a few potential candidates from the past two trading days.
Over the past few days, we’ve noted the relative strength in the markets, so its no surprise interest has turned to stocks that are ready to breakout. We like the MarketSmith workflow, where everything important is presented on the chart, with more detail a click away.
A scan of stocks near a breakout zone (Near Pivot) produces Monster Beverage Corp. (MNST). Earnings are impressive (left panel), with the company due to report again in early February. Estimates are for an 11% increase in 2020. Volume has been above average.
In addition, Monster printed a massive cup and handle base, a favorite continuation pattern. The depth of the cup is approximately 13 points, rendering a potential target of 79.00 (+/-) in the weeks ahead. That would represent a 20% gain from the 66.36 pivot high and an area to take profits should this scenario play out into the 2nd or 3rd quarter.
Axalta Coatings (AXTA) has seen a lot of action lately. Earnings are climbing and IBD metrics (left panel) are impressive.
We’re watching AXTA for a break above recent consolidation for a run into earnings the first week of February. Also, note the previous beats starting with the company report in July. The October report saw the stock rise 10% in the two weeks thereafter. While it’s not a guarantee, a breakout this week suggests a test of the 32.20 pivot or 52 week highs.
Futures are higher again this morning.
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