With the major market indexes below key moving averages and IBD's recommended market exposure level at the lowest-possible 0%-20%, now is a time to put your primary focus on risk management. But armed with rules for how to buy stocks and when to sell stocks, investors should remain on the hunt for stocks like ServiceNow, Shake Shack and 2023 IPO SharkNinja to keep their watchlist up to date for when these stormy seas start to settle.
The IBD Breakout Stocks Index provides one hunting ground. Currently featuring ServiceNow, SharkNinja and a host of others, the index forms the basis for the IBD Breakout Opportunities exchange traded fund from Innovator Capital Management.
Mirroring troubles in Big Tech stocks like Nvidia and Microsoft, the BOUT ETF has struggled recently. After launching a breakout last month, the fund has retreated below its 50- and 200-day moving averages. But on Tuesday, the ETF bolted back above the 200-day benchmark with a gain of 2.25%. It jumped another 1.5% on Wednesday.
Early Thursday, BOUT component SharkNinja soared 14% after slaying Q2 estimates and raising its outlook.
Still, like Nvidia stock and others, the BOUT ETF offers a reminder to heed the eight "secrets" of selling. Reversals after early gains on Wednesday for Nvidia and the Nasdaaq only reinforce that point.
Shake Shack, SharkNinja, ServiceNow Swim Against Market Tide
Since three out of four stocks move in the same direction as the market indexes, swimming against that current is not easy — and not, in most cases, advisable. But stocks that show strength and resilience in tough times may be primed to move when the market turns around.
ServiceNow, SharkNinja, Shake Shack and several other names on the IBD Breakout Stocks Index continue to highlight signals for investors to watch. Indicators of interest include:
- Support and resistance around moving averages.
- Trend of the relative strength line.
- Formation of potential buy points near 52-week highs.
See Who Joins ServiceNow, SharkNinja On The IBD Breakout Stocks Index
Stock Market Indicators To Watch
Monitoring the three indicators noted above is a good way to keep tabs on stocks to watch as current market troubles play out. In addition to ServiceNow, SharkNinja and Shake Shack, investors can apply them to all the names on the IBD Breakout Stocks Index.
ServiceNow and Shake Shack have both found support at their 50-day moving averages. SharkNinja had been trading below that line until gapping right past it on its ferocious earnings beat.
The relative strength line shows if a stock is outperforming or underperforming the general market. Focusing on true market leaders is an important aspect of The IBD Methodology.
The RS line SharkNinja has spiked to a new 52-week high on the company's Q2 report.
ServiceNow's line also jumped after the company reported earnings last month. Analysts touted the company's artificial intelligence push. The RS line slipped as Nvidia, Microsoft and other fellow tech stocks took hits at the end of July and early this month. But the relative strength line for ServiceNow has perked up.
Shake Shack has seen a strong jump in relative strength.
As noted earlier, current market conditions are not conducive to making new buys. But keep an eye on stocks like ServiceNow that are forming new chart patterns with entries near new highs. SharkNinja and Shake Shack also both fit that bill.
SharkNinja gapped up past an 80.81 buy point in an early stage flat base. The stock now trades near the top of its buy range.
IBD Breakout Opportunities ETF
The IBD Breakout Opportunities ETF from Innovator Capital Management tracks the IBD Breakout Stocks Index. As with other index ETFs, this fund allows you to invest in the entire index vs. buying individual stocks. Learn more here about the ETF and Innovator.
Follow Matthew Galgani on X (formerly Twitter) at @IBD_MGalgani.
