Upticks - July 2023

Additions

Arista Networks (ANET -0.02% - $174.09)

ANET looks quite bullish technically following its quick rally which has brought this back to test highs of the last six months.  Since this stock bottomed out last June, it’s recovered in an increasingly parabolic fashion, with a trend of higher lows in recent months.  While daily charts show the stocks breakout attempt into late May initially failing, its subsequent retracement proved quite constructive and formed lows at much higher levels before immediately pushing back higher towards the highs of its recent four-month range.  The success in recouping losses so quickly is quite positive technically towards expecting an upcoming breakout, which likely would carry up to $193, or a 100% price extension of the move up off this past January lows.  Momentum remains positively sloped on a weekly basis and not overbought given the extent of the minor consolidation since March.  Overall, last week’s close at $171.64 signified a new all-time weekly high close, and ANET might also generate a new all-time monthly high close above March 2023 levels if it finishes out the month of July above $167.86. Such a bullish development could jumpstart a push back to $193 in the near-term.  Only on pullbacks under $148 would ANET violate support and postpone its rally, which is not expected in the weeks ahead. 

Vertex Pharmaceuticals Inc (VRTX -0.06% - $358.06)  

While VRTX has been a steady outperformer within my Institutional (FSGA) UPTICKS list, I find that this looks attractive also to introduce now to FS Insight as an UPTICKS long.  VRTX remains one of the strongest technical patterns within all of Healthcare and has returned more than 23% in Year-to-Date terms (YTD) making this one of the top 10 performers in the Sector SPDR S&P Healthcare ETF (XLV 0.01% )  Despite the push above July 2020 highs which caused VRTX to reach overbought levels, this has shown little to no evidence of any technical deterioration that would suggest this is peaking.  Specifically, the short-term rise back above May highs at $354.46 was a constructive near-term development and should allow this to resistance targets near $409.

Newmont Mining (NEM -1.64% -$43.61)

I’m introducing NEM as a Technical long in my UPTICKS list for both institutional and retail clients.  Technically I expect gains to challenge and exceed July highs at $45.92 which should carry the stock up to test 2023 highs just over $55.Near-term, this consolidation in Newmont hasn’t done much damage, and the stock looks to have found a strong level of support near prior lows from 2022.US Dollar and Treasury yields are on the verge of turning back lower, which could happen between now and early August.  This should allow for precious metals and precious metals stocks like NEM to enjoy a better than average August at a time when the metals likely begin to turn back sharply higher. NEM’s gains above $55.41 from January 2023 would allow for a push higher to the low $60’s which represents an area of resistance on any gains. Specifically, $62 looks very important as a 50% retracement of the entire decline from Spring 2022.  Overall, while not shown, monthly charts over the last decade show current levels to be an attractive level of Fibonacci support (61.8%) of the entire run-up from 2015 into 2022.  Given that my technical work anticipates an upcoming rally in Gold back to all-time highs, NEM looks particularly attractive as a technical long which has largely languished in recent months. Importantly, the larger uptrend from 2015 lows connecting Spring 2019 lows intersects right near current levels.  This makes NEM an appealing risk/reward, and gains look likely in the weeks and months to come.  Only a decline back under $37.45 would serve to postpone an upcoming rally, which looks premature

Alibaba Group Holding Ltd. (BABA 0.55% - $94.98)

BABA has been gradually stabilizing following its two-year decline from October 2020 to October 2022 that resulted in an 80% decline from its all-time peaks from all-time highs.  The resulting consolidation has had numerous false starts, but has slowly carved out a bullish base that has begun to gain momentum as optimism towards stimulus has risen.  Gains up to $100 look likely and above that level argues for a quick rally to test early 2023 peaks near $120.  Overall, this entire base from early 2022 has begun to resemble a reverse Head and Shoulders pattern which would be confirmed on weekly closes back above $120.  Such a development would be hugely bullish on an intermediate-term basis, helping this to lift up to $158 and eventually to $185-$190.  A declining US Dollar might serve to aid the rally in many Emerging markets like China, and looks quite likely to continue in the months ahead down to targets at $97.50.  Bottom line, BABA looks like an appealing technical risk/reward for gains in the weeks/months to come.

Also added: First Solar Inc. (FSLR 2.12% - $200)

Deletions

Lennar Corp. (LEN- $126.55)

LEN’s parabolic gains have helped this stock gain more than 100% since lows were made at $62.54 back in June 2022 and now looks ripe for consolidation in the months ahead.  Counter-trend exhaustion signals are now present (Based on DeMark indicators) on weekly and monthly LEN 0.98%  charts, and momentum has started to diverge after having moved to overbought levels.  While the technical structure in LEN remains in very good shape, I’m choosing to remove LEN from my UPTICKS list given the rally in the past year, as other stocks look like more favorable risk/rewards heading into a difficult seasonal stretch of the year.  Pullbacks could find initial support at $116, while breaks of this would likely result in weakness down to $106. Overall, it still looks technically like LEN might still be able to gain ground to the mid-$130’s.  However, the combination of monthly overbought conditions coupled with counter-trend exhaustion indicators suggest that this might be a better risk/reward following consolidation in the months ahead.

Also deleted:

• ON Semiconductor Corp. (ON 2.29% )
• Humana Inc. (HUM -1.77% )
• Casey’s General Stores Inc. (CASY 0.71% )

Laggards

Canada Goose Holdings Inc (GOOS 1.17% - $17.50) 

GOOS has increasingly started to show evidence of peaking out technically after numerous failed rally attempts in the last few weeks. This stock remains under the ongoing mild consolidation uptrend that was broken back in May. An upcoming decline to test and break $17 looks likely in my view which should take GOOS down to challenge and potentially break $15.50. Any decline under $15.50 makes this vulnerable to a decline to $13.Only a rally back over $19.50 would serve to help this technical pattern, which is considered strong resistance.  If this is exceeded, this would temporarily postpone any decline. However, over the next 4-6 weeks, it looks probable that GOOS should turn lower to challenge monthly lows.  This is to be avoided, specifically based on my technical analysis, not for any fundamental reasons.

Children’s Place (PLCE 3.50% - $29.86) 

Following an eight-week 100% percentage gain rally since late May, PLCE is finally nearing important resistance targets which likely cause some strong overhead supply to this recent rally.  Volume has tapered off sharply in recent weeks, and the area near $19.50 should present a difficult area to surpass in the weeks ahead.  Three factors support an upcoming stalling out in this rally.  First, prices are very close to significant Ichimoku resistance on weekly charts.  Second, prices are now just approaching former lows made last May 2022 that should have importance as resistance on this retest.  Third, daily momentum indicators like RSI have begun to diverge negatively on price gains.  Overall, it’s unlikely in my opinion that PLCE 3.50%  continues uninterrupted through the month of August.  Pullbacks seem likely which might challenge $22.50 initially, with intermediate-term targets near $15.

Other Laggards:

• The Boston Beer Co. (SAM -1.42% )
• KeyCorp (KEY 0.62% )
• Target Corp (TGT)

Upticks