Rash Of Leaders Test 10-Week Lines

With the market sliding into a correction this week, many leaders sold off as they digested gains from recent months.

Some of these stocks have pulled back and are in secondary buy zones, but investors should hold off on buying stocks until the environment clears. Buying in a down market is tougher, since investors don't have the wind at their backs.

Informatica (INFA) reversed from a near-record high but found support at its 10-week moving average. That's the stock's first test of the key line since its March 24 breakout from a flat base. The pattern was not a late-stage structure since Informatica reset its base count last May.

Last month, the data integration software maker beat views with a 33% rise in Q1 earnings and a 24% gain in sales.

Group mate Tibco Software (TIBX) is also testing its 10-week line for the first time since its March 24 breakout. Despite volume being only 18% above average on breakout day, it managed to climb 17% before the latest pullback.

In late March, Tibco reported a 33% increase in Q1 profit and a 20% gain in revenue. Both were above analysts' expectations. The company also guided Q2 sales above views.

Fossil (FOSL) will unveil its first-quarter results before the market's open May 10. Analysts polled by Thomson Reuters see the watchmaker's earnings rising 25%. Fossil's bottom-line growth has slowed for the past two quarters. Sales are slated to climb 30% to $512 million.

The stock is in its second test of its 10-week moving average. Trading volume has dropped sharply, a good thing to see in pullbacks.

Through Thursday's close, Rackspace Hosting (RAX) is having its worst week since the week ended Jan. 21. But the stock found support at its 10-week line. Rackspace cleared a cup base March 30.

Rackspace provides website hosting and cloud-computing services. The company reports Q1 earnings May 9 after the close. Views are for 12 cents a share or up 71% from a year ago