BREAKING: Futures Fall With Dow Jones At 2023 Highs
Multiple IBD 50 growth stocks are in bases, but some are running out of steam while others are in the early innings. You can maximize profits by buying stocks in early-stage bases, which have a better chance of making big runs. Charts of Nvidia (NVDA), Meta Platforms (META) and ELF Beauty (ELF) show they still have room to run.
The optimal time to buy is in a first- or second-stage base to capture a stock’s big run. Third-stage-base breakouts have less chance for success, and fourth-stage and later bases should be avoided. By the time a growth stock is in its fourth base, it’s probably too obvious to investors. Late-stage bases tend to have flaws, such as wide and loose price action.
IBD MarketSmith pattern recognition identifies the stage of every base. Stocks must climb at least 20% from the previous buy point to be considered in the next stage of a base formation.
Since the stock market bottomed in October 2022, many stocks are now in later-stage bases. Novo Nordisk (NVO) is in a third-stage flat base with a 104 buy point. Its first base formed April-November 2022, and the second base was in May-August of this year.
Comfort Systems (FIX) is in a stage-three cup-with-handle base with a 191.27 buy point after a long uptrend. Keep in mind that the stock has more than tripled from a first-stage breakout in early 2021.
A base count resets to stage one when a stock undercuts the low of a previous base. For example, Salesforce (CRM) formed a double-bottom pattern from July to November, with lows that went below a flat base that preceded in June and July.
Salesforce is now extended from a 238.22 buy point following the company’s strong earnings report this past Wednesday.
Samsara (IOT) broke out of a cup base with a 32.41 buy point on Friday following the company’s October-quarter earnings report. The 13-week cup undercut a double bottom that immediately preceded it, resetting the base count.
Dynatrace (DT) is another stock now in a stage-one cup base thanks to resetting its base count. The current base’s low rests 13% below the low of a flat base that developed right before the cup started taking shape.
Several IBD 50 stocks are in second-stage bases.
Nvidia is back below the 476.09 buy point of a stage-two double-bottom base. The stock climbed steadily from its stage-one cup breakout in January and hit an all-time high on Nov. 20, the day before its October-quarter earnings report.
Meta Platforms is trading near the 326.20 buy point of what was a second-stage base.
First Citizens BancShares (FCNCA) is in the buy zone of a second-stage cup-with-handle base with a 1,450.56 buy point. The stock broke out on Nov. 15.
Follow Kimberley Koenig for more stock market news on X/Twitter @IBD_KKoenig.
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