Among the top stocks to buy and watch in the ongoing stock market rally, ASML, Lam Research, Asure Software, Five Below and Xponential Fitness triggered a sign that confirms their stock market leadership.
All boast the Relative Strength Line Blue Dot in MarketSmith. The designation — which appears in a MarketSmith screen — focuses on ideas with market-beating performance. They could be big winners amid the ongoing confirmed uptrend in stocks.
First, learn how to use the relative strength line. It measures a stock's price performance compared to the S&P 500. If the stock is outperforming the broader market, then the RS line angles upward. If a stock is performing worse than the broad market, then the line will point lower.
IBD readers should focus on stocks whose RS lines are hitting new highs during a stock's base formation or on the actual breakout. These stocks get institutional support during both weak and strong market environments.
The RS Line Blue Dot feature combines the relative strength line with MarketSmith Pattern Recognition. When a stock's RS line hits a new high while the stock is forming a base or breaking out, the Blue Dot appears on the MarketSmith weekly or daily chart.
Chip Stocks To Buy And Watch: ASML, Lam Research
ASML rose 0.5% midday Tuesday, continuing to rebound from the 50-day line and moving within striking distance of a cup-with-handle's 683.28 buy point.
Headquartered in the Netherlands, ASML produces the world's most-advanced lithography machines, an essential component in chip manufacturing. It is the only provider of extreme ultraviolet (EUV) lithography machines, which enable the increasingly complex chips the world relies on. ASML's EUV technology is indispensable for industry giants like Taiwan Semiconductor, Intel and Nvidia, which is an IBD Leaderboard stock.
Lam Research continues to trace a flat base with a 548.95 buy point. Lam Research supplies wafer fabrication equipment to the semiconductor industry. It is one of just three companies involved in etching and deposition for chip production. Lam also makes equipment used in the vertical stacking of NAND flash memory modules. These account for roughly half of total sales.
Five Below Breaks Out
Monday's IBD Stock Of The Day, Five Below, added to Monday's breakout gains, rising another 1.2% Tuesday midday. Shares are in the buy range from a 212.66 buy point in a flat base. The 5% buy area runs up to 223.29.
On March 15, Philadelphia-based Five Below — which operates 1,292 teen- and tween-focused discount stores in 42 states — closed out 2022 with an earnings and revenue beat. Fourth quarter earnings popped 23% to $3.07 per share, ending a three-quarters string of year-over-year declines.
Other Stocks To Buy And Watch: Asure, Xponential Fitness
Software leader Asure is still in the 5% buy zone above a 14.93 flat-base buy point following Monday's 6.8% breakout rally. Shares tacked on 2% midday Tuesday, near the top of the buy range that tops out at 15.68.
Asure provides web-based workforce management software.
IPO Leader Xponential Fitness is back in buy range past a rare ascending base. The stock initially broke out past the 30.80 entry on April 3, but quickly ran into selling pressure. The buy zone goes up from the buy point to 32.34. Shares rose 1.4% Tuesday midday.
Xponential Fitness is the largest global franchiser of boutique fitness brands, including Pilates, indoor cycling and yoga. The company operates in 48 states and 18 countries.
Be sure to follow Scott Lehtonen on Twitter at @IBD_SLehtonen for more on stocks to buy and watch.
