Chart patterns and consolidations are worth watching, as they provide actionable guidance for making a purchase.
With the recent uptrend in large-cap stocks, as reflected by the performance of the SPDR S&P 500 ETF Trust (NYSEARCA: SPY), many stocks with top revenue and earnings growth rates are flashing bullish technical signals.
Large caps with strong chart action include Affirm Holdings Inc. (NASDAQ: AFRM), MongoDB Inc. (NASDAQ: MDB), UiPath Inc. (NYSE: PATH), Synopsys Inc. (NASDAQ: SNPS) and Crispr Therapeutics AG (NASDAQ: CRSP).
Given the continued outperformance of growth stocks in recent months, it shouldn’t come as a surprise that all those stocks are categorized as technology stocks or biotech stocks. The tech and biotech industries are known for innovation and a fast pace of disruption.
Growth stocks good candidates for chart analysis
Technical analysis often aligns better with growth stocks due to their price momentum. Growth stocks exhibit stronger trends and tend to see more significant price movements, making trend indicators more valuable.
In contrast, value and dividend stocks, known for stability and steady income, may not display the same level of price fluctuations, making technical analysis less effective.
In those cases, tracking dividend yields and fundamental metrics, such as revenue and earnings increases, may be all you need to make investing decisions.
Affirm gapping higher
Shares of the buy now, pay later company gapped up 5.16% on January 22. Despite some selling since then, the stock continues to hold above its 50-day moving average, as you can see on the Affirm chart.
The stock is currently in actionable range, as it is trading between its 50-day line and its previous high of $52.48, from December 7.
Wall Street expects Affirm to become profitable this year for the first time, with earnings doubling to 65 cents a share next year.
MongoDB forming bullish consolidation
The MondoDB chart shows the stock forming a base after a cup-with-handle breakout failed in early December. In the past month, upside weeks have shown higher trading volume than downside weeks, a bullish sign.
The database platform maker began reversing a downtrend in early January, is currently trading above its 50-day moving average, offering an early entry point before the stock clears its December 4 high of $442.84.
Analysts are forecasting explosive earnings growth this year of 258%, to $2.90 per share. The rapid pace of data migration to the cloud is a growth accelerant.
AI powering UIPath higher
UIPath, which develops AI-powered business automation software, is forming a base with support above its 50-day average after gapping 27% higher in early December following its quarterly report.
The UIPath chart shows the stock consolidating below a December 19 high of $26.52. Watch for it to clear that price in heavy volume, to show upside momentum. However, more aggressive investors could use continued support above the 50-day line as an early buy point.
Synopsys’ Ansys deal to boost shareholder value
Synopsys stock has been a stellar performer within the Technology Select Sector SPDR Fund (NYSEARCA: XLK), advancing 15.47% in the past three months and 54.72% in the past year.
The chip design software maker is another company that’s been riding the wave of AI. A recent deal to acquire engineering simulation software company Ansys Inc. (NASDAQ: ANSS) is likely to offer further upside premium to shareholders.
On the Synopsys chart, you’ll see the stock is forming a base. Synopsys stock regained its 50-day moving average on January 22. The stock is currently actionable below its prior high of $573.77.
Investors who hold on tight can see gains from Crispr
Crispr Therapeutics is a Swiss-American biotechnology company that develops gene-based treatments for serious diseases. As is common with biotechs, the stock is fairly volatile, with a beta of 1.96. The Crispr Therapeutics chart shows some wide intraday price swings.
That volatility can result in significant gains; Crispr stock is up 51.79% in the past three months, but investors had to stomach a rollercoaster ride to capture those gains.
The stock’s current area of consolidation is sloppy, but aggressive investors could consider upside momentum during the week of January 22 as a catalyst for an early entry.
