Deron Wagner | Aug 07, 2020 12:43AM ET
While the NASDAQ has been drifting sideways over the past few weeks, select leading growth stocks have been forming bullish consolidation patterns that could trigger breakouts to explosive moves higher. Below we'll break down three of our top picks.
Even in the most bullish stock market, the best growth stocks do not go straight up forever.
Although the NASDAQ Composite remains in a strong bull market, the benchmark tech index has been in “chop mode” since July 13.
However, a few leading growth stocks have been taking advantage of this choppy price action by digesting their recent gains and forming new, tight-ranged bases of price support that could eventually fuel their next big advances.
h3 Identifying healthy price consolidation in top stocks/h3When leading growth stocks take a rest, they either quickly pull back from their highs (correction by price) or trade in a sideways consolidation pattern (correction by time).
Each of the three growth stocks below are setting up for their next major rallies have been consolidating in a tight, sideways range.
There are two main factors we look for to confirm a stock’s consolidation pattern is healthy:
After four to five weeks (or more) of choppy, sideways price action, top stocks may be poised to once again break out to another leg higher within the established uptrend.
These 3 growth stocks may soon be ready to rip higher:
h2 1. Lululemon /h2Lululemon Athletica (NASDAQ:LULU) cleared the highs of a tight-ranged, flat base pattern two weeks ago, but failed to follow through.
The price remains in a narrow range, and is now holding above the highs of its last base. If not already long, LULU should be monitored for a breakout entry.
On the annotated weekly chart below, notice how the tight consolidation has been coiling like a spring that’s ready to pop:
After an explosive breakout to new highs earlier this year, Okta (NASDAQ:OKTA) found support a few weeks ago, at the first touch of its rising 10-week moving average.
This base has been enabling OKTA to digest the gains of its recent advance. A move above the high of the range is the logical buy point if not already long with full size:
Zoom Video Communications (NASDAQ:ZM), now a work from home household name, rallied 50% from its last base in just seven weeks–a pretty explosive move.
Since this advance, the price found support last week, when ZM reversed just 15 cents shy of its rising 10-week moving average.
We obviously don’t know whether or not ZM is ready to move out this week or next, but we already established a half position at the $257 level:
Original Post
Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.