When a stock moves to a 52-week high in price, traders take notice. The S&P 500 is down 6.2% year to date as of Monday's close and certain stocks are continuing to rally to new highs in spite of overall selling pressure. Once a new 52-week high is created, the stock begins to show up on many scanners and stock filters which can bring added attention to the stock. Depending on the strength of the stock, this added attention can be positive or negative for the share price. The following stocks recently made new 52 week highs, showing strength in an overall weak market.
Reynolds America (NYSE:RAI) is up 23.93% year to date to $40.55, from $32.72. The stock is trading well above both the 50- and 200-day moving averages, after an aggressive rally from the August 9 intra-day low at $31.82. The $40 level was stiff resistance, with June and October tests failing to penetrate the level. Monday was the third daily close in a row above $40, indicating the stock seems to have found footing above the former resistance level. This is new territory for the stock, and there's no upside resistance. A drop below $37.68, on the other hand, would create a new swing low and indicate a weakening of the trend.
Global Cash Access Holdings (NYSE:GCA) is a small cap company, but has the potential for a big move if it can close a price gap. The stock broke above both the 50- and 200-day moving averages this month and has been a tear. Monday's close at $4.24 (a 52-week high) brings the stock very near resistance at $4.36. $4.36 is the highest price seen since the stock dropped 44.5% on July 27, 2010. If the stock can break convincingly above $4.36, the potential exists for the gap to close and the price could run towards the $6.50 to $7.00 area. RSI is currently in overbought territory, and is a warning signal, yet it may remain in overbought territory for some time if the resistance level is broken. The current price area has been tested and failed before, therefore a drop back below $3.80 indicates the breakout is unlikely to happen in the near term.
ViroPharma (Nasdaq:VPHM) is up 39.5% in the last year to $22.78, from $16.33. The stock has been pushing steadily higher throughout October and November, hitting fresh 52-week highs in three of the last five trading sessions. There is no resistance to upside, as this is new territory for the pharmaceutical stock. Support is likely between $20.30 to $20 which is a former resistance area that held off advances between July and September. A drop back below $20 would be a signal the stock is weakening. (For more, see Support And Resistance Reversals.)
Transatlantic Holdings (NYSE:TRH) has had a choppy year so far. Between the start of the year and early October, the stock traded in a range between $53 and $43.85. It was not until November that the stock managed to break through stiff resistance at $53. Since the breakout, the stock has had multiple closes above $54, giving confirmation to the breakout. There is some resistance over head at $56.42, which was an intra-day high on November 19, 2009. If the stock can push through this last resistance level, it has potential to run towards the $60 area. $53 should be watched closely, as a drop back below could indicate the former range will continue.
The Bottom Line
"Stocks hitting fresh 52-weeks highs" is a common screen used to find which stocks have been performing well over the last year. These four stocks from assorted sectors have moved higher this year, despite an overall weak market. The potential exists for these stocks to continue to run to the upside, but the support levels mentioned should be watched closely and risk must be properly managed. If these stock are to continue to rise, watch for volume to remain high or improve, as this is a sign that there is significant buying interest in the stock. (For more, see Technical Analysis Introduction.)
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At the time of writing, Cory Mitchell did not own shares in any of the companies mentioned in this article.