Things are a bit tricky on the buy side right now. Wall Street has pushed prices up so hard so fast that chasing stocks here carries the risk of reversal. Even if such a reversal ends up becoming just a consolidation move for another push higher, that could still stop some traders in their positions for a loss.
Still, one stock to consider here is EPAM Systems (EPAM). As the daily chart below shows, EPAM broke out today, although it might be in need of some consolidation before a continued move higher:
EPAM has jumped 10% in the last week, with bullish action in momentum, trend and volume indicators. The stock's Commodity Channel Index (CCI) and Force Index are both hitting new highs along with EPAM's price.
Ideally, we'd see some trading between Friday's close and today's highs. There's certainly resistance above, as demonstrated by the reversal from today's highs.
However, as long as we maintain a close above Friday's highs, this is a solid bullish setup. And if we happen to close below those levels, I wouldn't say that's bearish, just that we'd be back within a much wider trading range where the volatility is bound to increase.
EPAM's weekly chart shows an even-stronger setup:
This chart shows that last week's close is again important. Should we maintain those levels this week, EPAM appears headed for the mid-$80s. The Relative Strength Index (RSI) has been consolidating along with price, but has done so while staying above 50.
I don't like to see a stock's RSI fall out of overbought territory, but that's now several months in the past for EPAM. The concern is still validated by the recent dull action since the RSI's fall, but it's turned out to be nothing more than a consolidation rather than a momentum change.
A close by EPAM over $76 for the week should give us the little push we need in the Moving Average Convergence/Divergence (MACD) as well, triggering a bullish crossover. The stock has performed very well on crossovers, which keeps the possibility of a rally all the way up to $90 in play. However, I think $85-87 is a more-realistic target here.
Should we see a close below last week's low, then I would stop out of this position and look short. That would set us up for a retest of the $62-63 area, and I don't think any bull wants to stick around for that in this market.