Amid both stock market volatility and signs of strength, here’s a look at the latest update to the IBD Breakout Stocks Index. The index, updated weekly, highlights a wide range of stocks to watch. It currently includes Etsy (ETSY), Crocs (CROX), ServiceNow (NOW), Taiwan Semiconductor (TSM), RingCentral (RNG) and Pinduoduo (PDD).
As the Q3 earnings season winds down, stocks to watch on IBD lists like the IBD 50, Sector Leaders, IBD Big Cap 20 and IBD Long-Term Leaders are flashing signs of both support and resistance.
The concept of “floors” of support and “ceilings” of resistance is at the core of understanding how to read stock charts and identify bases and buy points. A quick review of the current stock charts for ServiceNow, Crocs, Etsy, Pinduoduo, Taiwan Semiconductor, RingCentral and others brings these concepts into focus.
See All Names On The IBD Breakout Stocks Index
ServiceNow continues to find support along its 10-week moving average, making it one of the top stocks to watch. The maker of cloud-based workflow software joins fellow software stocks Microsoft (MSFT) and Salesforce.com (CRM) on IBD Long-Term Leaders. An impressive 415 funds with an A+ rating from IBD report a stake in ServiceNow stock. Boosted by strong average annual growth rates for both earnings (55%) and sales (34%), the company once again made IBD’s list of new buys by the best mutual funds.
After a big rebound from the coronavirus crash in March onto a breakout to a new all-time high in October, Etsy stock pulled back to test support at its 10-week line. The stock rose over 5% Wednesday as it builds a base showing a 154.98 buy point. The company connects buyers and sellers of handcrafted goods and other unique items.
Showing how the stock market is forward-looking, Etsy stock began rebounding well ahead of the resurgence in the company’s reported earnings. After several quarters of declining EPS growth, Etsy has come back with a vengeance. The IBD 50 stock has posted two quarters of explosive, triple-digit earnings and sales growth.
After a rocky start from its 2018 IPO, Pinduoduo has emerged as one of the top Chinese stocks to watch. PDD stock was featured in the IBD Breakout Stocks Index on Nov. 4 just as it gapped up past a buy point. Pinduoduo provides a mobile e-commerce platform built to resemble a “virtual bazaar,” where online shoppers browse products while interacting with each other.
Founded in 2015, Pinduoduo is the largest social e-commerce platform in China. Boosted by eight quarters of strong sales growth ranging from 37% to 355%, PDD stock is well extended beyond its post-earnings breakout. The stock has eased off its earlier highs, but remains above the big gap-up on Nov. 12.
Taiwan Semiconductor has successfully tested support at its 10-week line. It’s now extended well beyond the 84.10 buy point it initially cleared in September. Over the past three quarters, the semiconductor industry giant has generated average EPS growth of 78%.
Sales growth has ranged from 30% to 45% over the same period. TSM stock sports seven quarters of rising fund ownership and a strong B+ Accumulation/Distribution Rating. With a 98 Composite Rating, TSM stock ties Macom Technology Solutions (MTSI) for top billing among semiconductor manufacturers.
Like Etsy and other top stocks to watch, Crocs stock made an impressive rebound from the coronavirus crash. The maker of innovative casual footwear for women, men and children has not really even paused to set up a new base. CROX stock has consistently found support along its 10-week moving average as it keeps making new all-time highs. It managed to move back into positive territory Wednesday after reversing the day before.
Confirming its stock market leadership, the relative strength line has been rising sharply for months. In Q2 (71%) and Q3 (65%), Crocs posted two solid quarters of EPS growth. Sales growth rebounded in Q3, rising from an 8% decline in Q2 to a 16% increase last quarter.
After breaking out of a cup with handle in October, RingCentral has pulled back, but has found support at its 10-week moving average. RNG stock is now trying to dial in a return to its old high after finding support at its longer-term 40-week line. Like ServiceNow and Zoom Video (ZM), RingCentral is a leader in the enterprise software industry group. The company develops software to allow voice, text and fax communications across multiple devices. Revenue growth has been exceptionally steady, ranging from 29% to 34% over the last eight quarters.
IBD Breakout Opportunities ETF
The IBD Breakout Opportunities ETF (BOUT) from Innovator Capital Management tracks the IBD Breakout Stocks Index. As with other index ETFs, this allows you to essentially invest in the entire index in addition to or rather than buying individual stocks. Learn more about the ETF and Innovator funds.
Follow Matthew Galgani on Twitter at @IBD_MGalgani.
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View more information: https://www.investors.com/research/breakout-stocks-technical-analysis/stocks-to-watch-etsy-now-crox-pdd-tsm-rng-test-support-resistance/