Several stocks in the elite IBD 50 list are in buy range after the S&P 500 and Nasdaq both hit record highs on Friday. The five highest-ranked are YY ( YY ), Advanced Energy Industries ( AEIS ), Nvidia ( NVDA ), Electronic Arts ( EA ), and Paycom ( PAYC ).
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All five of these IBD 50 stocks have Composite Ratings of 95 or better. Composite Ratings, which go from 1 to 99, combine a variety of fundamental and technical ratings. All-time stock winners often have a 95+ CR near the start of their big runs. YY, Advanced Energy Industries have best-possible 99 Composite Ratings. Electronic Arts and Paycom have 98 CRs while Nvidia is at 96.
Futures for the S&P 500 index and Dow industrials rose 0.1% vs. fair value early Monday morning. Nasdaq 100 futures climbed nearly 0.2%.
China’s Shanghai composite and Japan’s Nikkei climbed modestly Monday intraday. China had a strong manufacturing survey reading and its central bank cut reserve requirements for certain loans. Japan’s Tankan survey found that large manufacturers’ confidence is at a 10-year high.
On 10 a.m. ET, the Institute for Supply Management will release its September U.S. manufacturing index.
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The Chinese social media company is rated No. 1 in the current IBD 50 list. YY is seeing strong earnings and revenue growth via users livestreaming themselves performing music or comedy, playing video games, or even eating. Last Tuesday YY blasted past an 83.10 buy point from a cup base , rising 9% in double normal volume. YY continued to edge higher the rest of the week. On Friday, YY briefly became extended, rising as high as 89.37, past the 5% chase zone that extends to 87.26. But YY pared gains to close at 86.83.
Advanced Energy Industries
Back in late July, Advanced Energy Industries reported 67% earnings growth in the second quarter and a 40% revenue gain, both better than expected. The chip-equipment maker also guided views higher.
Advanced Energy Industries on Friday rose 3.1% to 80.76, clearing a cup-with-handle base entry of 78.95. Volume was 33% above normal, which is OK but not great. The stock had rebounded from its 50-day line on Wednesday.
Nvidia is now back in a buy zone, but investors should be cautious. Technically, Nvidia is in a second-stage base because its early 2017 consolidation just undercut a prior base, but the stock has been on a huge run for the past three years, as Nvidia’s graphics chips are in high demand for self-driving cars, artificial intelligence and even bitcoin mining.
Nvidia roared out of a flat base with a 174.66 entry on Sept. 15, rising as high as 191.20 the following session, 9.5% over the buy point. Nvidia then quickly reversed amid unconfirmed reports that Tesla (TSLA) was working with AMD (AMD) on AI chips and that the automaker would use Intel (INTC) chips for its “infotainment.”
Over five sessions, Tesla fell as low as 170.16 on Sept. 25. But two days later, Nvidia moved back above the 174.66 entry, finishing the week at 178.67.
Investors should never let a 10% gain go to zero or turn into a loss. Because Nvidia only rose 9.5% above its buy point, and didn’t fall 7% below its buy point, the stock’s old entry is still valid. But it hasn’t been great action.
Electronic Arts broke out of a flat base with a 116.14 buy point on July 26, a day before reporting solid earnings. Since then, EA’s stock has largely traded sideways, with a few brief forays just above or below 5% buy zone.
On last Monday’s tech stock shakeout, Electronic Arts fell 3.6% to 114.20, dropping below its buy point and through its 50-day moving average. But by Thursday, EA was back in buy range and closed the week at 118.05, back above its 50-day line.
Video game makers like EA are counting on a strong holiday season.
Paycom offers cloud-based payroll and human resource software, mostly for small- to mid-sized businesses. Paycom edged past a 73.71 entry on Aug. 22. But since then shares have been trading just above or below the buy point. On Friday, shares edged up to 74.96.
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