Dow Jones Edges Up, Boeing Breaks Out; This Software Sector Rules

The Dow Jones industrials inched a touch higher in stocks today during Friday afternoon trading, helped by at least three of the blue chip index’s components rising at least 1 point or more. Boeing broke out. One group within the software sector continued to shine.

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The three Dow Jones industrial stocks outperforming the market: Boeing (BA), rising more than 7 points to 351.50 and clearing a narrow handle on a shallow cup base at 348.67 (on a weekly chart the handle is not visible); Home Depot (HD), carving out the right side of a new cup; and Caterpillar (CAT), in the midst of forming its own shallow base that could emerge either as a cup or a saucer.

Meanwhile, database software stocks ruled the upside.

New Relic (NEWR), a December 2014 IPO, rocketed more than 4% to 94.31 and new highs in volume running more than triple usual levels. The San Francisco-based firm staged a breakaway gap past a 79.18 buy point on May 9 following sharp fiscal fourth-quarter results (earnings of 9 cents a share, revenue up 34% to $98.5 million, a quarterly record).

(Read this Investor’s Corner column on how to find an alternate buy point when a stock stages such a huge gap above the normal buy point.)

New Relic holds an outstanding 95 Composite Rating on a scale of 1 to 99 in IBD Stock Checkup.

Other key leaders in the database software group include Splunk (SPLK), which reports quarterly results on May 24 after the close; Tableau Software (DATA), up nearly 8% and thus extended past an 87.70 buy point in a base on base; and Varonis Systems (VRNS), the New York-based firm that swung from six years of bleeding red ink to a profit of 24 cents a share in 2017.

The S&P 500 and the Nasdaq composite both edged roughly 0.1% lower. Volume jumped vs. the same time on Thursday on both exchanges. Friday is a so-called “witching day” in which both weekly and monthly stock and index options expire.

Yet the Nasdaq, at 7371, is showing only a mild decline of nearly 0.5% for the week after surging 1.3% and 2.7% in the prior two weeks.

Chip equipment firms are weighing on the tech market. Applied Materials (AMAT) gapped down more than 7% and reached as low as 48.53 intraday, but shares are getting support near the psychologically key 50 price level.

Less Chipper Lately

Notice on a daily chart how the fast-growing semiconductor equipment supplier’s stock has so far survived two tests of support at the critical 200-day moving average. You can see a 200-day moving average in black on any MarketSmith daily chart.

Late Thursday, Applied Materials posted a 54% jump in fiscal Q2 profit to $1.22 a share. That number beat even the highest analyst estimate tracked by Thomson Reuters. Sales grew 29% to $4.57 billion. After-tax margin lifted 360 basis points to 27.9%.

Find more updates in stocks today here. Please follow Saito-Chung on Twitter at @IBD_DChung for more commentary on growth stocks, breakouts, sell signals and financial markets.

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