The elite IBD 50 consists of top-rated growth stocks that meet rigorous criteria. But for four of them, the charts show weakness.
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These signs warn investors that it may be time to sell, reduce a position, or wait for things to improve before buying.
Fluency Energy (FLNC) triggered a sell signal after breaking out of a cup base with a buy point of 26.78 on June 6th. It also broke above a handful entry at 24.77 before that.
The energy storage stock began its climb after its March quarterly report on May 10, when its CEO said the company expects inflation cut law rewards in the second half.
Stocks dipped below the 21-day exponential moving average on June 23 in heavy volume. This 7.3% decline triggered the round-trip sell rule from buy points 26.78 and 24.77. Stocks are now testing the 50-day moving average amid uncertain chart action.
The company is not yet profitable, but analysts see the company posting a small profit in the fiscal year ending September 2024.
Software Growth Stock Trigger Sell Rule
monday.com (MNDY) broke out of a cut base with a buy point of 171.89 on May 31, after Piper Sandler reiterated an overweight rating on the stock with a price target of 200.
The shares hit a 52-week high of 187 on June 16, but closed down 2.2% in a bearish reversal that marked Monday.com’s high.
Shares of the growth stock have continued to decline and are below the 21-day line. The relative ley line has been on a downward spiral since June 1, another issue.
Thursday’s 2.2% loss triggered the 7% loss reduction rule. The workflow management platform stock found support near its 50-day line, offering some hope for a rebound.
The company’s profits in 2023 are expected to decline by 70% compared to 2022, which also plays against this leader.
Robotics stock plunges
Symbolic (SYM) took off after the company’s Investor Day on May 18. Shares soared to a 52-week high of 53.83 on June 15.
But then a five-day sell-off began on June 20 that ended the stock’s momentum. Shares held around the 21-day line, which gave the stock at least temporary respite while it looked for direction.
Symbotic received negative press after NINGI Research released a brief report on robotics stock on June 29. UBS downgraded the stock to neutral from a buy rating on the same day.
The warehouse robotics company has posted full-year losses since its IPO in 2021, with analysts not expecting a profit until fiscal 2024.
MercadoLibre (MELI) dropped from the IBD 50 list of fastest growing growth stocks after its 7.5% plunge on Thursday in heavy volume.
That wasn’t the only bearish action for this growth stock.
Shares of the Latin American e-commerce and payment company fell below the 50-day line in early June and found resistance at that line. Also, the relative strength line appears to be on a faster downward trajectory than the stock itself.
The company’s quarterly sales growth has slowed in the past four quarters, although profits have increased.
Follow Kimberley Koenig for more stock insights on Twitter @IBD_KKoenig.
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