Dow Jones giant Apple leads your stocks to watch for the upcoming week. Chip plays Monolithic Power Systems and KLA make the list. So do Arista Networks and Jabil. Nearly of the stocks formed handles in the recent market pullback and are either in bases or near buy points.
The market is in a confirmed uptrend as the major indexes posted several weeks of solid gains. But they pulled back sharply Friday as Fed Chair Jerome Powell said he expects, "a restrictive policy stance for some time."
Investors should add exposure carefully with the market retreating.
MPWR stock is on the Leaderboard watchlist. Monolithic Power also is on the IBD Long-Term Leaders list, while KLAC stock is on the watchlist. ANET stock and Monolithic are on the IBD 50 list. Arista Networks was Friday's IBD Stock of The Day.
Apple Stock
Tech behemoth Apple reported quarterly results at the end of July. Earnings fell 8% while revenue growth slowed to just 2%, but that beat views. Executives also signaled stronger sales growth ahead.
AAPL stock has consolidated in the last 34 weeks, running up sharply from mid-June to mid-August. Shares have forged a handle buy point of 176.25.
Last week, Apple stock sank 4.6% to 163.62, cutting through its 21-day moving average on Friday. But it's holding above its 50-day and 200-day lines, as well as its weekly moving averages.
The relative strength line, the blue line in the charts provided, had been hitting new highs in the last couple of days. That reflects AAPL stock's outperformance vs. the S&P 500 index.
AAPL stock currently has a 91 Composite Rating, which combines a number of key technical indicators into one easy-to-read score. The company's declining earnings have given it an 84 EPS Rating. But Apple's RS Rating is 86.
Arista Networks Stock
Arista Networks offers cloud networking solutions to large data centers and computing companies. Arista has recorded accelerating earnings and sales growth for the past three quarters. For the second quarter, Arista's EPS rose 59% and sales increased 49% to $1.051 billion.
ANET stock is in a 34-week double-bottom base that began forming when shares began pulling back from highs of 148.57 at the end of December. Arista stock began climbing the right side of the pattern's second leg in early July, but the momentum has tapered slightly since Aug. 18.
ANET stock fell 5.4% to 123.03 last week to just below the 21-day moving average. Despite shares being well off highs, the RS line hit a new peak on a weekly chart.
That's allowed ANET stock to forge a handle, lowering the official buy point to 132.97. Shares are also far less extended from their 50-day and especially 200-day lines.
Arista has a perfect 99 Composite Rating and leads IBD's computer networking industry group, according to the IBD Stock Checkup. And its accelerating earnings growth earned ANET stock a muscular EPS Rating of 96 out of a possible 99.
Monolithic Power Systems Stock
Chipmaker Monolithic Power Systems was featured as the IBD Stock Of The Day on Aug. 23.
Monolithic Power Systems stock surged from early June to early August, including strong Q2 results on Aug. Earnings leapt 80% to while revenue shot up 57% to $461 million. Like Arista, its was the third straight quarter of faster profit and sales gains for Monolithic.
MPWR stock is in a 34-week cup-with-handle base with a buy point of 541.49 according to the charts. Its handle started forming on Aug. 11 as it began to pull back from highs.
Initially, the handle was rather small for a 40%-deep base, but MPWR stock sold off 6.85% to 476.62 last week, including more than 7% on Friday. At the very least, investors should wait for a move above the Aug. 25 before considering an early entry.
KLA Stock
Semiconductor equipment maker KLA was also featured as the IBD Stock of The Day on Aug. 17. KLA provides quality control and yield management systems for companies that make semiconductors, panel displays and other electronics. It has more than a 60% share of the ultrathin silicon wafer inspection and defect review market, which are used to make electronic chips.
Its market dominance and growing demand for semiconductors helped KLA post better-than-expected quarterly results at the end of July. KLA's adjusted earnings rose 31% and sales increased $29% to $2.49 billion. And at its June investor day, KLA announced its five-year growth forecast. KLA expects EPS of $38 on $14 billion in revenue by 2026.
UBS analyst Timothy Arcuri predicts KLA's wafer fab equipment share will gain 100 basis points this year, the largest gain in company history, he wrote in a note to clients.
KLAC stock has a 399.06 buy point for its cup-with-handle base, according to MarketSmith analysis. Most of the handle is above the 200-day line, but shares fell 3.4% last week to 359.18, below that long-term level. KLAC stock had been flirting with an entry from breaking the downtrend of its handle.
KCLA stock has a 90 Composite Rating and a 96 EPS Rating, with a Relative Strength Rating of 70.
Jabil Stock
Manufacturing provider Jabil has seen its RS Rating steadily improve to 83. The company posted positive earnings and revenue growth over the past eight consecutive quarters. In the most recent results from June, Jabil's EPS increased 32% and its revenue rose 15% to $8.328 billion.
Jabil offers supply chain and logistics, automation, product design and engineering solutions to companies in over 30 countries.
JBL stock is in a 34-week cup-with-handle base with a 65.98 entry point on the daily chart. The handle had formed above resistance just over 63. A push above Thursday's intraday high of 64.19 could provide an earlier entry.
Jabil sank 1.65% to 62.14. The RS line for JBL stock is at a new high on a weekly chart.
JBL stock has a near-perfect 98 Composite Rating and an EPS Rating of 96.
You can follow Harrison Miller for more stock news and updates on Twitter @IBD_Harrison
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