The stock market has shown resilience in recent weeks, overcoming a brief pullback and continuing its rally. Several top S&P 500 stocks are setting up with buy signals or nearing potential buy points.
Nvidia, Costco, General Electric, Urban Outfitters and Datadog are among the stocks in focus. These companies span key sectors like technology, retail and aerospace. Their financial results and outlooks remain strong amid an uncertain economic environment.
While inflation and interest rate hikes raise concerns about consumer spending, these leading stocks have found ways to drive growth. Their technical strength reflects ongoing demand from investors.
Technology Leader Nvidia Builds New Base
Nvidia (NVDA) has been the top-performing S&P 500 stock in 2023, gaining 230% year to date. The semiconductor leader continues to stand out, forming a new base after a powerful run.
On Friday, NVDA stock rose nearly 3% to 483.35, climbing 7.4% for the week. It has formed a double-bottom base and topped the 476.09 buy point on Friday, according to MarketSmith analysis.
The relative strength line for Nvidia has also hit a fresh high on a weekly chart. This shows its industry-leading price performance over the past year.
Thursday marked Nvidia’s first up day with above-average volume in more than two months. Heavy volume on a price surge can signal institutional buying. The weak close trimmed some gains but buyer interest is picking up.
Nvidia is set to report fiscal third-quarter results on November 21. Analysts anticipate substantial growth, with earnings forecast to soar 478% to $3.35 per share. Revenue is expected to skyrocket 172% to $16.11 billion.
The company’s leadership in AI and graphics chips continues to drive exceptional growth. Nvidia recently announced new chips for the China market after U.S. limits on exports of high-end AI semiconductors.
With a 99 Composite Rating out of 99, NVDA ranks first among fabless semiconductor stocks. It boasts a 99 Relative Strength Rating and 93 EPS Rating. As Nvidia forms a new base, it offers a compelling technical entry for leading growth stocks.
Urban Outfitters Stock Nears Buy Point Ahead of Earnings
Urban Outfitters (URBN) is testing key resistance levels ahead of its earnings report on November 21. URBN stock advanced 1.4% to 35.40 on Friday, down just 1.1% for the week.
Shares have formed a cup-with-handle base with a 36.10 buy point, according to MarketSmith chart analysis. The handle offers a lower-risk entry compared to buying at the peak.
Urban Outfitters has gained 48.5% year to date, beating the S&P 500. It faces an uncertain environment for consumer discretionary spending but its technical strength reflects investor optimism.
Analysts expect fiscal third-quarter earnings to double to 81 cents per share as revenue grows 8% to $1.26 billion. Same-store sales growth is projected to hold steady at 4.9%.
The retailer has topped earnings views in seven of the past eight quarters. Strong execution and creative brands have allowed it to outperform other apparel chains.
URBN stock sports a 97 Composite Rating and 93 Relative Strength Rating. Its 99 EPS Rating highlights exceptional earnings growth. Urban Outfitters offers exposure to resilient demand among younger consumers.
Costco wholesale nears a new buy point
Costco Wholesale (COST) is bouncing back towards record highs after finding support at its 50-day moving average. COST stock climbed 2.5% to 577.12 on Friday, gaining 2.9% for the week.
The wholesale retailer is working on a flat base with a 571.16 buy point, according to MarketSmith analysis. Costco has held its ground better than many retailers amid inflationary pressure.
The company will announce monthly sales results on November 29. Fiscal first-quarter earnings are due on December 14. Investors will look for signs that shoppers are maintaining spending on essentials.
Costco continues to benefit from its subscription membership model. In September, CFO Richard Galanti said a membership fee increase is a “question of when, not if.” The stability of membership revenue helps offset shifting demand.
With a 90 Composite Rating, COST has shown resilience amid a difficult environment for retailers. Its strong 87 Relative Strength Rating reflects leading price performance. The stock offers exposure to defensive discount retail.
Datadog Breaks Out As Earnings Growth Accelerates
Datadog (DDOG) has rebounded powerfully after tumbling over 50% from its November 2021 peak. DDOG stock surged 26.2% this past week, breaking out above a 102 buy point in what appears to be a double-bottom base pattern.
The cloud software company delivered accelerating earnings and revenue growth in its third-quarter report on November 7. Adjusted EPS leapt 96%, up from 71% growth in the prior quarter. Revenue grew 49% to reach $438 million.
Datadog provides monitoring and analytics tools for cloud-based operations. It has turned profitable amid fast growth, unlike many recent software IPOs burning cash.
The company also guides conservatively. Q4 revenue projections of $590-$600 million topped views for $567 million. Datadog sees full-year revenue growth of 60%-61%, up from 57% previously.
While trading about 15% off its 52-week high, DDOG remains nearly 50% below its all-time peak. The double-bottom base positions it to regain its leadership if the current breakout sustains. Strong fundamentals support the improving technical picture.
GE Stock Nears Buy Point As Aviation Leads Growth
General Electric (GE) stock has been a top performer in 2023, gaining 72% year to date following the spin-off of its healthcare business. GE continues to improve its operations and narrow its focus.
GE stock picked up 1.9% on Friday to reach 115.27, adding 5.8% for the week. It is building the right side of a flat base with an official buy point of 117.96 according to MarketSmith analysis. But it is actionable from a recent intraday high of 114.89.
The company’s Q3 earnings beat on October 24 drove GE stock to that peak, as GE raised full-year guidance for its aviation unit. Operating profit is now expected to exceed $6 billion, up from $5.6 to $5.9 billion previously.
As travel rebounds, GE is seeing strong demand for jet engines and services. Aviation revenue grew 25% in Q3, led by a 34% order increase. The segment should continue driving GE’s growth in 2023.
GE plans to spin off its power and renewable energy businesses next year. The more focused aviation company will take the name GE Aerospace.
With its restructuring efforts progressing well, GE stock offers exposure to the aviation recovery. Its 92 Composite Rating and 95 Relative Strength Rating reflect its technical leadership this year. The stock appears poised to take flight again soon.
Conclusion: Top Stocks Flash Buy Signals Amid Market Rally
While crosscurrents buffet the market, top stocks continue setting up in leading industries. Nvidia, Urban Outfitters, Costco, Datadog and GE have shown resilience amid recent volatility.
Their strong technical and fundamental pictures position them well to outperform. As the rally persists, investors should watch for strength in leading stocks. Those able to deliver earnings growth and assert technical leadership offer the best opportunities.
By focusing on highly-rated stocks in uptrends near buy points or breaking out, traders can aim to get aboard at the start of potential big moves. The current confirmed market uptrend and recent consolidation provide a favorable environment to buy strength.
Leading stocks flashing buy signals or moving into new buy zones deserve close attention. Their price action and fundamentals reflect their potential for substantial gains in the weeks and months ahead.