Stage Analysis
This looks to follow the stage progressions where price and volume match the characteristics of each stage. It is currently in a Stage 2.
Base Count
After coming out of the transition, it seems to be in Base 3 of Stage 2. I would typically rather base 1 or 2, but these bases are pretty short lived. Each run after the base has been about 30%.
Base Structure
| Identifiable base on weekly and daily | YES, currently appears to be in base 3 |
| Prior up-trend of at least 30% | YES, 34.22% |
Length of base
At least 9 weeks ascending base At least 7 weeks for all other bases | About 4 weeks |
Contain elements of strength:
RS at new high tight price ranges KO Recoveries | RS at 52-week high. The price range in the base is tight and very big volume in the run up to the base |
Contain elements of support:
Base on top of base Price above 40-week MA | MA’s are stacked as they should be and 20-day MA is supporting the price |
| Shakeout near low of base | YES, at bottom most price range of base |
| Handle area within upper half of base that drifts down on lower-than-average volume | YES, but volume is not low enough |
| Volume surge of 50% above average at pivot | NO, the pivot hasn’t formed yet even though the price closed above the point of least resistance |
Technicals
My only concern is that the IT sector is weak relative to the SPX. However, within the IT sector this is 90.85% stronger than the rest of it. The price did close above the point of least resistance on about average volume. I’d like to see it pull back to that PoLR on little volume.
VCP Criteria
| Decreasing volatility from left to right | YES, it is already very tight |
| 2 – 6 contractions (typically 2 – 4) | NO, only 1 of 8.34%. |
| Each contraction is roughly 1/2 the previous | NO, only one already tight contraction |
| Deepest contraction < 50% | YES, 8.34% |
| Deepest contraction < 2.5X the market decline | YES |
| On right side tight price ranges from high to low of range | YES |
| On right side lowest volume in base | NO, waiting for a little volume day |
| Rising RS as emerging from base | YES |
Fundamentals
Earnings are due next week on 1/26/2023. The fundamentals aren’t as strong as I’d like at the moment but are showing growth and acceleration. However, it would be better to show more.
| Past 2 quarters EPS growth >= 25% | NO, last Q was -12.5% but recovered this past Q to 14.29% |
| Past 2 quarters margin growth >=25% | NO, last Q was only 8.95% but the latest Q was up 50.23% |
| EPS growth >= 25% in past 3 – 5 years | NO, only the most recent was 33.33% but all prior was less than 25% |
| EPS surprises | YES |
| EPS break out | NO, but growth has been growing and accelerating |
| ROE >= 17% | NO, 8.12% |
| Earnings drift | YES, big shakeout after last Q’s lack of growth but recovered afterwards |
