Amazon.com leads this week's list of stocks to watch, along with fellow tech giants Uber and Shopify. Dow Jones construction equipment company Caterpillar nears a buy point as construction spending ramps up. Semiconductor supplier Lam Research also features on the list.
Each of this week's stocks are trading near their 2023 highs.
The market rally is under pressure as of Thursday, so investors should be cautious about making new buys. But they should be paying close attention to stocks near buy points, holding key support and showing relative strength.
Except for Shopify, all of this week's stocks to watch are forging handles in flat bases. Flat bases don't have handles, but in these instances they could be used as early entry opportunities.
Amazon Stock
Jeff Bezos' tech titan Amazon was the IBD Stock Of The Day Aug. 31. Amazon recently signed a deal with Shopify, allowing the e-commerce company to use its merchant distribution network as part of its Buy With Prime program.
Meanwhile, Amazon faces a possible antitrust lawsuit from the FTC. The regulator is examining policies it believes forces merchants to use Amazon logistics and advertising services.
Amazon cut a deal with the European Commission to end an antitrust investigation in December.
Shares edged up 0.1% to 138.23 last week, rebounding from the 50-day line on Thursday. AMZN stock is trading in a new flat base with a 143.63 buy point. The current pattern is showing an early "handle" entry around 139.96.
AMZN's flat base can also be viewed as a handle to a yearlong base.
Amazon stock has a 95 Composite Rating out of a best-possible 99. The Composite Rating combines various technical indicators into one easy-to-read score. Shares have an 81 EPS Rating. Amazon's relative strength line surged in early August and it has a 93 RS Rating.
AMZN stock has soared 65% this year, and traded 0.4% higher early Monday.
Amazon stock was added to SwingTrader on Aug. 31.
Shopify Stock
Canada-based Shopify completed the sale of its fulfillment unit to privately held Flexport on June 6. The company announced plans to exit the logistics business in early May to avoid competing directly with Amazon. Shopify received a 13% equity interest in Flexport as part of the deal.
The fulfillment sale ended a costly effort, sending Shopify earnings estimates soaring. It also paved the way for the recent expanded Amazon partnership.
Shares hit their 2023 high of 71.43 on July 14. Shopify stock began forging the right side of a base in late August, gapping up Aug. 31 on the Amazon deal. Shares have since pulled back.
SHOP stock now has a cup-with-handle base according to a weekly MarketSmith chart, offering a 67.60 buy point. That handle will be valid on a daily chart after Monday.
Shopify has a 98 Composite Rating and a 90 EPS Rating. The relative strength line for SHOP stock climbed in late August and it has a 96 RS Rating.
SHOP stock bolted 81.5% this year. They jumped 0.8% in Monday's premarket trading.
Caterpillar
Caterpillar ranks first in the Machinery-Construction/Mining group according to the IBD Stock Checkup. The industry group rallied more than 22% this year as construction spending boomed.
Monthly construction spending rose to $1.972 billion in July, up 0.7% from the revised June estimate and increasing 5.5% from 2022 levels, the U.S. Census Bureau announced Sept. 1. Construction spending hit $917.4 billion through the first six months of the year, up from $890.4 billion for the same period last year.
Meanwhile, Caterpillar earnings accelerated the past two quarters, jumping 75% for its most recent report on Aug. 1.
CAT stock is building toward a 293.88 flat base buy point. Shares formed an early entry handle around 289.41.
Caterpillar has been finding support at its 21-day line for the past few weeks. The stock jumped nearly 18% since Dec. 31 and is up 21% since late June following a cup-with-handle breakout. CAT added 0.2% early Monday.
Caterpillar has a perfect 99 Composite Rating and a strong 92 EPS Rating. CAT stock has a 93 RS Rating.
Uber
Uber is a member of the IBD Leaderboard list and was the IBD Stock Of The Day for Thursday.
The ride-sharing and food-delivery provider posted its first quarterly profit in Q2. Uber posted an operating profit of $394 million for the second quarter, much improved from the loss of $2.6 billion last year. Revenue climbed 14% to $9.23 billion, below FactSet estimates of $9.34 billion. Uber's gross bookings grew 16% to $33.6 billion, just beating forecasts.
Uber stock hit a 52-week high of 49.49 on July 31 and pulled back to find support at the 50-day line. Shares have formed a flat base with a 49.49 buy point and a 47.40 early entry. Investors could view the pattern as a shallow cup-with handle base, making 47.70 the official entry.
Investors could view Uber as actionable after breaking the downtrend of the handle.
Uber has an 86 Composite Rating and a 76 EPS Rating. Uber's relative strength line is near 52-week highs and shares have a 96 RS Rating.
Shares vaulted more than 91% in 2023. They climbed 0.7% in premarket action Monday.
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Lam Research
Chipmaker and semiconductor parts provider Lam Research saw shares spike nearly 60% this year and analysts are optimistic heading into 2024.
Lam Research's earnings and sales declines accelerated the past two quarters as chip demand fell. But Lam managed to top estimates for Q1 results in July despite earnings falling 32% to $5.98 per share while revenue dropped 31% to $3.2 billion.
Analysts expect a big rebound for the chip industry next year fueled by a surge in artificial intelligence applications and memory chip demand. The trade group SEMI forecasts global semiconductor manufacturing equipment sales will rise 14.4% next year to $100 billion. This year, chip equipment sales are expected to fall 18.6% to $87.4 billion after record sales of $107.4 billion in 2022.
LRCX stock is trading in a flat base with a 726.52 buy point. Shares are showing an early handle entry at 711.91.
LRCX stock fell below its 21-day line on Thursday. It's still holding its 50-day moving average and found support along its 10-week line.
But chip stocks had a tough week.
Lam Research has a 91 Composite Rating and a 71 EPS Rating. The relative strength line is near recent highs with a 94 RS Rating.
You can follow Harrison Miller for more stock news and updates on X/Twitter @IBD_Harrison
