Futures for the S&P 500 index rose slightly early Monday morning. Several top-rated stocks that were notable winners in 2017 are moving toward fresh buy points. Wal-Mart Stores ( WMT ), Tencent Holdings ( TCEHY ), UnitedHealth Group ( UNH ), IPG Photonics ( IPGP ) and Arista Networks ( ANET ) are five stocks that have formed bases recently and are approaching entries.
[ibd-display-video id=3065640 width=50 float=left autostart=true]Wal-Mart Stores and UnitedHealth are both Dow industrial components, each doubling the S&P 500’s performance in 2017. The latter three all more than doubled last year. Tencent Holdings is one of a slew of top-rated Chinese stocks near buy points . Laser maker IPG Photonics is on IBD’s Rising Profit Estimates list while Arista Networks is an IBD 50 member .
S&P 500 and Nasdaq 100 futures rose less than 0.1% vs. fair value. Dow futures were up 0.2%.
Wal-Mart Stores has been trading in a narrow range since hitting 100.13 on Nov. 17, a day after gapping up 11% on third-quarter earnings. Shares have trended up slightly for the past four weeks, rising as high as 100.38 on Friday, just exceeding a 100.23 flat-base buy point, before settling to close at 100.13.
As Wal-Mart has consolidated, the Relative Strength line has drifted lower, reflecting the S&P 500 index’s modest outperformance over that time. But the RS line did rise modestly for most of last year, as booming online sales and other steps convinced investors that Wal-Mart would be a survivor in the age of Amazon (AMZN) and even pose real challenges to the e-commerce giant.
Wal-Mart rose 43% in 2017 vs. the S&P 500’s 19% advance.
Ideally, Wal-Mart would blast past its buy point in heavy volume, pushing the RS line to confirm the breakout and signal institutional support.
Tencent Holdings is a Chinese messaging and online gaming giant, operating the uber-app WeChat. Tencent is the archrival of Alibaba (BABA) and owns a stake in JD.com (JD) and several other notable Chinese companies, as well as Tesla (TSLA).
Tencent shares shot up 114% last year. Not surprisingly, the RS line climbing steadily during the year, reaching a recent peak on Nov. 21, when Tencent hit a record 56.05. Shares fell sharply to the 50-day line but found support and quickly rebounded.
Tencent rose 7.6% last week, far outpacing the S&P 500 and Nasdaq, closing at 55.87 and finishing a 6-week cup base .
UnitedHealth has just carved out a short flat base with a 231.87 buy point. Shares rose 3.75% last week to 228.73, setting a record close on Friday.
The stock’s RS line gradually rose from late February to the end of November. UnitedHealth’s RS line is moving closer to that old high.
IPG Photonics has just completed a cup-base pattern going back the minimum six weeks, giving it a 248.33 buy point. IPG Photonics tumbled from record highs in late November and early December. Shares then began to rebound, but for the rest of 2017 held below the still-rising 50-day line. IPG retook its 50-day line on Tuesday and then kept rising, surging 13% for the week to 242.34.
IPG Photonics’ RS line advanced in 2017, especially from July to late November. IPG shares leapt 117%
Arista Networks was a huge 2017 winners, sprinting 143%.
The stock is now in a cup-with-handle base with a 241.60 buy point. Handles offer a chance to shake out weak holders before the stock blasts out of a base. But the handle largely formed as the rest of the market had big gains, pushing the RS line lower last week despite a fractional stock gain. Ideally, the RS line should confirm at least a short-term high, like a handle, on a breakout. That might be challenging for Arista, unless it advances while the market pauses.
Arista Networks closed Friday at 236.77.
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