The stock market is poised to gap up this morning on the open and some popular stocks are simply surging. Traders look for something to trade and there are some that jump on to momentum stocks as they breakout. This happened with AAPL last Friday as it jumped up over 5%.
AAPL gapped up at the end of July when it announced earnings and news that it was planning on doing a stock split. This stock has attracted the attention of the masses ever since Warren Buffett said it was a must buy and a special case stock in which earnings and valuations did not matter. Last week we found out that Warren Buffett had sold some bank stocks and bought Barrick Gold – a move he did secretly without getting on TV to boast about it.
But AAPL succeeded in pausing and consolidating its big July gap up to breakout again on Friday. Shares of TSLA have done a similar thing.
Notice that the 20-day Bollinger Bands on TSLA came together two weeks ago. TSLA successfully consolidated in a narrow range right below $1500 to break through that barrier and surge up to $2100. Squeezes in the 20-day Bollinger Bands often precede breakouts.
A momentum stock in a similar situation that TSLA was in before its surge is DHR.
DHR is consolidating right below $210 just as TSLA was when it was trading on $1500. Notice the DHR pink 20-day Bollinger Bands are squeezing. This is a stock in a position to breakout and run. DHR is the stock for the Danaher Corporation, an American globally diversified conglomerate with its headquarters in Washington, D.C.. The company designs, manufactures and markets professional, medical, industrial and commercial products and services. It’s a giant company with a market cap of $147 billion. It’s liquid so trading robots can jump on it.
It’s catching people’s eyes a covid play. According to a Motley Fool article:
“A significant catalyst for Danaher stock has come from its Cepheid diagnostics business. Cepheid produces a Covid-19 test. The key advantage of Cepheid’s test is that it can produce a result in 45 minutes. It’s impossible to understate the role of accurate testing. Achieving this single objective would be a significant step in getting our society functioning at some level of normal.”
While I am expecting fairly dull action in the DOW and Nasdaq this week it will be interesting to see what DHR does.
-Mike
