After closing out the week on its lows and then gapping lower after the Labor Day weekend, the stock market reversed course intraday and closed at its highs for the day. This reversal is taking place near the bottom of the recent trading range for the markets, and could lead to another round-trip to the top of the range. While the majority of stocks remain damaged, there are a few names that are starting to develop decent patterns.
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Jazz Pharmaceuticals, Inc. (Nasdaq:JAZZ), for instance, cleared a base in July and despite all the recent market antics, has remained above its base. Volatility in the issue has increased along with the markets, but JAZZ held above its 50-day moving average and is still near all-time highs. Ideally, JAZZ would settle down and consolidate a little more on decreasing volume, but traders should closely monitor the $42.50 level. A move above this would put it back to all-time highs.
Acacia Research Corporation (Nasdaq: ACTG ) has also experienced an increase in volatility when the recent market decline began in August. However, ACTG did find support near the bottom of its recent trading range near $32. It turned higher from there and went on to challenge its all-time highs near $46. ACTG is now pulling back towards the $40 level which may be an important area to watch. This was near the top of its base prior to its failed breakout in July, and has alternated as support and resistance a few times. If ACTG can find buyers in this area, it may launch an assault on new highs.
While CSH Cash America International, Inc (NYSE:CSH ) remains in a consolidation, it too is very close to all-time highs. CSH had been in a steady uptrend leading into the recent market turbulence. While it declined along with the markets, it looks like it may be settling into a consolidation rather than a topping pattern. They key is to watch how CSH reacts here as it tests its 50-day moving average again. It has been stuck under the average, but if it can close above it, it may lead to a breakout attempt.
Nu Skin Enterprises, Inc. (NYSE: NUS ) is another stock very close to its all-time highs. NUS had been in a consolidation and maintained its trading range through the recent market weakness. NUS surged through the top of the base last week and, in the process, hit new highs. While the breakout was not sustainable in the near term, the move came on an increase in volume and could have follow-through in the coming days. NUS pulled back towards its 50-day moving average and could be attempting to bounce here. If NUS can find its footing here, it could result in a move to new all-time highs. (For more, see Moving Averages: Introduction.)
The Bottom Line
The market remains very vulnerable in the intermediate term and not much has happened to change the overall picture. The S&P 500 has settled into a trading range as it tries to stabilize after the sharp declines from early August. However, it does look like the markets are attempting to rally from the bottom of the range again, and more stocks are starting to set up well. Interestingly, the stocks mentioned in this article are all at or near all-time highs. This is a good clue that these stocks are leaders and are worth following. If the markets can build off this consolidation, it could help propel these stocks higher. (For related reading, check out Technical Analysis: Introduction.)
Charts courtesy of stockcharts.com
At the time of writing, Joey Fundora did not own shares in any of the companies mentioned in this article.