Stocks in focus: This week we will see if earnings momentum can keep going

Dollar Tree (DLTR) shares broke out of a long term downtrend and back above key moving averages over the last quarter. In fact, many of the beaten down discount chains such as Five Below (FIVE) and Dollar General (DG) have started to reverse major downtrends.This week we will see if earnings momentum can keep going as shares have already rallied 21% year-to-date. Investors will look for insight into how Dollar Tree is navigating the transition after the $1 billion Family Dollar sale (yes, they paid $8.5 billion in 2015) and how its core stores are performing in the current economic environment.The last two quarters have seen rather calm price action as the stock had stabilized with minor gains of 3.1% and 1.9%. That stability comes after a three quarter losing streak with average losses of -13.7%.

Technically, shares made their big move in mid-April as they broke out of a longer term neutral range as well as a long term downtrend. Shares have eclipsed both the 50 and 200-day moving averages and seem to be back on the right track.The breakout of the rectangular bottom gives us an upside target of roughly $98 a share, so there is still some upside potential. That move would fill the gap created last September and bring shares into a stronger resistance area around $100.To the downside, there may be an opportunity to enter the name. We have a potential scenario where old resistance becomes support giving an entry level around $79.50/$80. That would be a good risk/reward set-up for those that may have missed the initial breakout.Overall shares still have room to run, but most of this upside move may already be in the stock as shares near an overbought condition with much overhead resistance ahead.

CrowdStrike (CRWD) has returned from the ashes after last year’s Delta Airlines computer outage that caused over 7000 cancelled flights. In fact, as they head into this week’s earnings, shares are trading just under all-time highs.The cybersecurity company has seen shares decline over the past two results, but that hasn’t stopped its continued momentum. The stock averages a one day move of +/- 8.5%, so expect volatility.

Technically, shares come into the week at a very intriguing pivot point. After breaking out to new highs, price action has seen shares pullback right to its old resistance areas from which it broke above.Will old resistance become support or are we looking at a potential bull trap?Its RSI is indicating that we may be able to push higher. Based on its history we have seen some extreme overbought conditions at prior highs and we are not there yet. A solid beat and guide could see additional momentum in what continues to be one of the top stocks within the cybersecurity sector.Speaking of that strength, shares are shining on a relative basis. They are up 36.7% year-to-date outperforming the biggest cybersecurity ETF in CIBR which is up 12.8%.That said, downside risk could be steep given the recent run. Stepping in front of this stock ahead of results could be costly. On weakness wait for a better risk/reward entry and look for support just around $405.

Broadcom (AVGO) is basically Nvidia’s baby brother. It is in the $1 trillion market cap club, a top holding in both the Semiconductor ETF (SMH), the Technology ETF (XLK) and the Nasdaq 100 (QQQ).The semiconductor company has grown mightily in Nvidia’s shadows for years now. Shares have rallied just over 500% from its 2022 lows which pales to the 1250+% rally in Nvidia. However, over the past 52-weeks AVGO shares are leading up 82% compared to Nvidia’s 23% gain.Now that we’ve seen how price action settled out with NVDA, what could this mean for AVGO?

Technically, if AVGO wanted to step out of NVDA’s shadows this would be the chance to do so and lead the semiconductors higher. However, momentum is waning and we continue to see large caps struggle to make new highs – see Microsoft. The table is clearly set for a potentially large breakout. Shares are right at a key resistance area just under $250. It couldn’t break through last week, could earnings be the catalyst for getting it over the top?Given the overbought condition and tough market environment it should be a challenge. One may be able to buy this stock on a dip and wait for the rest of the market to catch up as we search for more clarity on tariff policy. Look for a pullback to the $220 area to add to or enter the name. For the long term investors, ignore the noise to come. Shares have suffered through the worst and should break out in due time. It just may not be this time.

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