When the market is rallying in full swing, it can sometimes be difficult to select which stocks, among the hundreds, might present the best case to buy. For spotting the strongest stocks on a technical basis, the StockCharts Technical Rank (SCTR) can be an essential tool.
There are many ways to use the SCTR Report. One would be to pull the top-performing stocks. Another strategy is to view the Top Up tab in the SCTR Reports panel on Your Dashboard to find the stocks with the biggest SCTR moves.
Dell Technologies (DELL) may not be leading the top 10 pack, but it’s beating hundreds of stocks that happen to be rallying as of this writing. Note: this can change during the trading day.
FIGURE 1. SCTR TOP UP REPORT. Despite DELL occupying 7th place at the moment of writing, it’s still among the top stocks gaining more technical strength in the US stock market.Image source: StockCharts.com. For educational purposes.
Dell Stock’s Price Action
Dell’s upward run is a continuation of the bullish reversal that started in August, as you can see in this weekly chart.
FIGURE 2. WEEKLY CHART OF DELL. Besides the dip in August, DELL’s uptrend, however volatile, remains unbroken.Chart source: StockCharts.com. For educational purposes.
Dell’s stock price uptrend remains intact despite the volatility and dip from February through August. The stock bounced back at the 61.8% Fibonacci retracement line, which, for many investors, served as a favorably low entry point.
Note the SCTR line above the chart. You should keep an eye on a crossover above the 70 line, which marks a bullish threshold for me (more on this later).
What Conditions Might Trigger a Buy?
Let’s switch to a daily chart.
FIGURE 3. DAILY CHART OF DELL STOCK. Watch those swing points for potential entry points.
The following are important points to note on the chart:
The swing points illustrate an almost textbook uptrend (blue trendline) of higher highs (HH) and higher lows (HL). The green arrows mark areas of support. If an uptrend consists of consecutive HHs and HLs, then support, and potential stop loss levels, would be right below each swing low. The horizontal dotted blue lines mark potential resistance levels (and, for swing traders, multiple opportunities to close out with a profit). Dell’s stock price is currently breaking above the first resistance level marked on the chart.The Chaikin Money Flow (CMF) below the chart is above the zero line (magenta rectangle), meaning buying pressure is a dominant factor in DELL’s momentum. You would want it to remain there if you were to go long.
So, when might you consider going long?
If you’re not already in the position, look at the SCTR line above the chart. Wait for the SCTR line to break above 70—that’s your first signal. Ensure its CMF reading remains strong and does not show signs of weakening. If DELL breaks the HH>HL pattern, then the short-term uptrend is in question and may trigger a stop loss below the swing point you’ve chosen as an ideal exit (where you place your stop loss will vary according to your risk tolerance).How To Set a SCTR Alert
On Your Dashboard, click the Charts & Tools dropdown menu.
Select Advanced Alerts. From Alert Components, select symbol from the TICKER PROPERTIES dropdown menu. Select SCTR in the PRICE, VOLUME, & SCTRS dropdown menu.The screenshot below displays the alert.
Save your alert and choose how you you’d like to be notified.
To learn more about setting alerts, visit the Technical Alert Workbench support page.
At the Close
When picking stocks in a rally, tools like the SCTR report make life easier. Dell (DELL) might not be sitting at the top spot right now, but it’s climbing fast, showing some serious technical strength. Keep an eye on that SCTR line—once it crosses 70, paired with a strong CMF reading, it could be your signal to go long. Set a SCTR alert on your dashboard to catch this market opportunity.
Disclaimer: This blog is for educational purposes only and should not be construed as financial advice. The ideas and strategies should never be used without first assessing your own personal and financial situation or without consulting a financial professional.