Stocks breaking out of new bases can struggle to make headway when the stock market is also laboring to stage a sustained uptrend, as it is now. But it's worth keeping an eye on sputtering breakout stocks in the IBD 50 as they could quickly get a lift and become stocks to buy.
IBD 50 stocks having trouble moving higher after breaking out of bases include medical stocks Cigna and Centene. Elsewhere, Enphase and Funko are also raising doubts about when they'll truly be stocks to buy.
But so far, there's been no sell signals in these stocks. And several rebounded on Friday.
Managed health care provider Cigna broke out above a flat base buy point of 273.67 on July 7, according to MarketSmith. But it hadn't even cleared the buy zone ceiling of 287.35 when it rolled over and then gapped lower and back into the base the past week.
After bouncing off its 50-day moving average, Cigna rebounded back near the buy point Friday on bullish news from another managed-care provider.
Is UnitedHealth A Stock To Buy?
UnitedHealth, a member of the Dow Jones Industrial Average, broke out above a handle buy point of 518.80 on July 8. But the next day it closed below that level and dipped to its 50-day line.
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UnitedHealth, however, got back on its feet Friday morning after it beat profit estimates and raised guidance. UnitedHealth, which is also on IBD Leaderboard, climbed back into its buy range after a four-day slump.
Centene, which provides managed health care services through government subsidized programs, broke out above a double-bottom base buy point of 87.44 on July 8. But it too quickly turned tail. On Friday, however, Centene rebounded back above the entry after UnitedHealth's results.
Enphase, which makes solar energy systems, became a stock to buy when it cleared a double-bottom base entry of 193 on June 6. It briefly surpassed the buy range, gaining as much as 13%. But it took a dive below the buy point before twice poking back into and above the buy zone. The stock on Friday fell below the entry and was testing its 50-day line.
Figuring Out Figurines
Funko porpoised above a long cup-with-handle buy point of 25.18 on June 6, but quickly sank below that entry. Shares are now about 7% below the buy point and testing support at their 21-day moving average. Funko is a purveyor of pop culture, including collectible figurines of Marvel and Pokemon characters.
The travails of these stocks are examples of how hard it's been to find stocks to buy that work in this market. What's an investor to do? Investors have two choices. They can either walk away from the market and risk missing potential gains if the market rallies back. The managed-care stocks showed it would have been premature to sell them. Or they can keep churning through screens and updating watchlists. The latter will keep them prepared with a fresh list of stocks to buy at the optimal time.
