FANG Stocks Lead Nasdaq, Dow Jones Up

FANG stocks provided additional fuel to the burgeoning rally in stocks today. Major indexes are acting well in the third week of a new confirmed market uptrend that got ignited by a Day 7 follow-through. The Nasdaq gained 1.6%, the S&P 500 almost 1% and the Dow Jones industrial average around 0.5%.




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Read more about the Jan. 4 follow-through and how it helps investors time their new entry points into stocks in The Big Picture column.

Volume is running at a faster pace vs. the same time Monday in both main exchanges, a good sign. It hints at active buying in the institutional crowd.

Internet, automaker, medical and movie stocks paced the market’s upside. Meanwhile, the software sector continues to be the best area for tech on Wall Street.

As seen in IBD Weekly, Software has jumped to No. 2 among 33 broad industry sectors in terms of mid- and long-term relative price performance. And looking at one of IBD’s most important stock lists for research on the biggest market winners, at least six of the nine names currently in IBD Sector Leaders hails from this sector.

They include Atlassian (TEAM), a current member of IBD Leaderboard; security software specialists Fortinet (FTNT) and Palo Alto Networks (PANW); and enterprise software firm Veeva Systems (VEEV), a leader in operations management for biotech and ethical drug companies.

Atlassian specializes in project collaboration among teams. The Australia-based global company is set to report fiscal Q2 results Thursday after the close. Analysts see earnings climbing 62% to 21 cents a share. Shares fell sharply on a Morgan Stanley downgrade at the open but have rebounded bullishly.

The proper buy point for the large cap is 89.92. This means the 5% buy zone for Atlassian goes up to 94.42.

See the daily and weekly chart annotations in Atlassian at Leaderboard here.

Veeva ranks highly in the IBD 50 as well. The stock has formed a new base with a 101.49 early buy point.

In The Dow Jones Industrials

Among the 30 Dow Jones industrial average components, at least 10 names marched ahead 1 point or more. UnitedHealth (UNH), the health insurance juggernaut, rebounded seven points and reached as high 256.83, a four-week high. Shares also climbed back above the long-term 200-day moving average, a good sign of returning demand for the megacap health care play.

UnitedHealth reported a 27% rise in fourth-quarter earnings to $3.28 a share, notching the 10th quarter in a row of 20% plus EPS gains. Revenue grew 12% to $58.42 billion.

Banks Are Rising Again

Fellow Dow Jones stock JPMorganChase (JPM) also turned a sour opening sell-off into a nice gain. Shares in the money-center bank rose 1% despite a small miss in fourth-quarter earnings. JPMorgan’s average core loans rose 6% in the quarter, when excluding its corporate and investment banking unit.

Small caps also joined Tuesday’s rally but lagged their large-cap peers. The S&P SmallCap 600 edged up nearly 0.1%. But at 894, the 600 is up nearly 6% since Jan. 1.

Please follow Chung on Twitter at @IBD_DChung.

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