Here’s my synopsis of Synopsys. $SNPS (October 21, 2020)

by DAN SNPS 
This is Scott with your Chart of the Day. I want to give you my synopsis of Synopsys ( NASDAQ: SNPS ), pun intended. SNPS ( NASDAQ: SNPS ) is one of the IBD 50 stocks and it looks pretty good here considering the market has seen better days.

On Synopsys ( NASDAQ: SNPS ) we have a stock that is in a well-defined uptrend; it is above all of the major moving averages. You can see how the moving averages are in order; we have the 200-day down here, the 50-day, the 21-day, and the 8-day exponential. Since September we have kind of a little bit of a rounded bottom here and in the last week or so Synopsys ( NASDAQ: SNPS ) has printed quite a nice looking handle.

Now, we are actually seeing this pattern in a lot of tech stocks, kind of this cup with a handle pattern. It is not an official binomial cup and handle, those typically last a couple of months, but for a short-term trade or a swing trade, this could definitely work.

What I want to see here on Synopsys ( NASDAQ: SNPS ) is a move above this downward sloping trendline. You can see how, ever since we kind of hit the high here on Tuesday, October 13th, we haven’t really been able to get back above. And we have seen progressively lower highs, but we have also seen higher lows.

The stock is getting into kind of a nice equilibrium pattern here and this could last, well, a month, this could last well past the election. But if we get some sort of stimulus package or kind of a change in the character of the market we could definitely see a move above this level on volume, and if we do, a continuation to the upside.

So I would definitely want to have an alert on Synopsys ( NASDAQ: SNPS ) at around $230.00 and then you would want to take a look at the stock and see if the volume confirms that move. Ideally, you would probably want to have a stop loss at least around $222.00; that’s about a 3 percent risk on an initial entry and then you would want to move that stop up to break even as soon as possible. This is definitely one that is on my watch list and I think it’s worth adding it to yours.

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