Danaher (DHR) - Get Report is a top-five S&P 500 gainer on Tuesday, following a very impressive fourth-quarter earnings report. The diversified machinery company began the session with a powerful gap-higher open that lifted it to new January highs. Despite the broad index weakness throughout the day, Danaher stock has remained well bid since the bell and is stretching its one-day gain to more than 4%.
Investors should be very positive on the stock in the near term.
After peaking in late July, Danaher entered a very narrow sideways pattern. The stock had surged more than 30% from its January low and was due for a consolidation. This healthy process continued for nearly six months while holding support near the May high. This key zone held the September, October, November and December lows and is now a major support zone.
Tuesday's huge breakout of this long consolidation is on extremely solid footing and has plenty of room to run.
With Danaher now trading at all-time highs, patient investors should consider the stock a buy on weakness. A fade back down to the $83 to $82 area would retest the upper band of the June-through-January consolidation.
On the downside, a close back below this week's low of $79.73 would be a clear warning sign that the new rally phase has stalled.
This article is commentary by an independent contributor. At the time of publication, the author held no position in the stocks mentioned.