The Relative Strength (RS) Rating for Linux leader Red Hat (RHT) entered a new percentile Thursday, with a big jump from 73 to 86.
IBD's unique rating tracks market leadership with a 1 (worst) to 99 (best) score. The score shows how a stock's price behavior over the last 52 weeks holds up against all the other stocks in our database. Over 100 years of market history shows that the best stocks tend to have an 80 or higher RS Rating as they launch their biggest price moves.
After having already broken out in February, Red Hat soared nearly 10% in massive volume Wednesday as it reported earnings. After rising early in Thursday's session, it gave back the bulk of those gains to close just fractionally higher.
Red Hat is considered extended and out of buy range. See if the stock forms a new pattern or follow-on buying opportunity like a three-weeks tight or pullback to the 50-day or 10-week line.
While the company's bottom line growth dropped in the prior quarter from 17% to 12%, the top line rose 19%, up from 16% in the prior report.
Red Hat earns the No. 2 rank among its peers in the Computer Software-Desktop industry group. Adobe Systems (ADBE) is the top-ranked stock within the group.
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