Last week was a big week for leading stocks in the stock market with a plethora of very high volume Stage 2 breakouts. As I mentioned on Twitter I haven’t seen this type of action since probably the October-December 2019 timeframe where TSLA was the big winner of that cycle. Institutions poured billions of dollars into some of these stocks producing some volume increases that were hard to ignore on the weekly charts. While the S&P 500 has yet to resume a Stage 2 uptrend, the action in leading stocks further strengthens the case for a continued uptrend in stocks and leading index QQQ remains in a Stage 2 uptrend leading the market.
Draftkings is a recent IPO from a reverse merger and ever since the reverse merger was announced last December this stock has shown a significant increase in trading activity. What I like about this chart is two things:
- The fact that DKNG essentially only had two down weeks during the coronavirus panic and held the 30-week MA during the panic
- The steady increase in volume that has occurred since the panic subsided.
The trading action is starting to remind me of the volume ramp in TSLA that produced a phenomenal run in that stock earlier this year. Stan Weinstein makes special note of stocks that exhibit this type of action in this quote:
Fastly (FSLY) and Chegg (CHGG) were unequivocally my favorite two Stage 2 breakouts from last week. FSLY has three characteristics that make it a great setup:
- It is breaking out from its first Stage 1 base
- The Stage 1 base is just about a year old making it fairly significant
- It is a blue-sky breakout with no overhead resistance
In my studies of past big winning stocks almost all of the big winners have no overhead resistance when they begin their move. Resistance can greatly inhibit a stock’s advance as holders of the stock at a loss look to get out to get back to even or recover their losses.
CHGG was in a previous uptrend that went into a consolidation in March 2019 and lasted until last week with a powerful Stage 2 breakout. With CHGG the most notable aspect of the breakout is the volume which showed a massive increase. Like FSLY, CHGG also has the important Stage 2 breakout criteria of no overhead resistance.
Finally, CHGG also has a base of about 14 months in duration from which it broke out from.
Disclosure: I am long DKNG, FSLY, CHGG.
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