Dow Jones Up 600 Points For Week; China Stocks Lead

The Dow Jones industrial average marked a bullish development as its weekly gain exceeded 600 points. The blue chip average not only rose for a fourth straight week, but it also climbed back above the pivotal 50-day moving average for the first time in months. The Nasdaq and small caps showed the same bullish action in stocks today.




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New steps by China and continued trade talks with the U.S. to defuse a budding trade war helped bring more portfolio managers out of the woodwork. Please read this IBD news feature on the latest $1 trillion dollar trade deal that China is offering its major trading partner.

UnitedHealth Group (UNH), exports-heavy Boeing (BA), Chevron (CVX) and at least four more components within the Dow Jones gained 2 points or more. They helped the 30-stock average, up 1.4% on Friday, to rise more than 2% for the week.

Crude oil had a big day as WTI near-term futures rammed more than 3% higher to $53.71 a barrel. Gold dropped nearly 0.9% to $1,281 a troy ounce. U.S. Treasuries sold off on the long end of the curve. The yield on the benchmark 10-year note rose for a fourth straight session, this time up 4 basis points to 2.79%.

The 10-year bond yield rises when prices fall. The benchmark 10-year note’s yield has now gone up 13 basis points year to date. Such action indicates large money managers are taking profits on U.S. government debt securities and possibly allocating more money into equities.

Boeing, a fantastic winner in 2017, is sculpting the right side of a new cup-type base. One bullish element right now: the aerospace giant’s 50-day moving average (drawn in red in all IBD daily charts) has flattened out. Bullish element No. 2: Boeing’s relative strength line has been rising steadily for more than seven weeks.

Translation? A rising RS line means a stock is smashing the day-to-day performance of the S&P 500.

Big Weekly Gains By The Nasdaq And Other Key Indexes

The Nasdaq composite, up 1% on Friday, gained an additional 2.7% for the week. At the day’s high of 7185, the tech-rich index has now climbed 16% from its Christmas Eve intraday low of 6190.

The Nasdaq has also risen significantly since Investor’s Business Daily noted a Day 7 follow-through taking place on Jan. 4. Read more about this potentially game-changing day for growth stocks in the Jan. 4 Big Picture column.

The S&P 500 rose 1.3% and ended the week strong as well, jumping nearly 2.9% for the week. The Russell 2000 advanced 1% on Friday, lagging large caps.

Can These China Stocks Outperform Apple?

While Apple (AAPL) rose 3% for the week for its second straight weekly gain, the iPhone giant is clearly struggling. Three weeks ago, the megacap tech showed some signs of bottoming action as shares bounced off a 52-week low of 142. At that price, Apple has corrected nearly 40% from its 233.47 peak.

It will no doubt take weeks, if not months, for Apple to form the right side of a new base. Please read this recent Stock Market Today column on four chart-related clues that Apple has reached a bottom in its normal-looking price correction.

Good bases produce excellent breakouts during a market uptrend. Meanwhile, MarketSmith is beginning to show a trickling increase in the number of stocks that are breaking out to new highs.

While Apple is clearly showing signs of struggling in markets such as China and India, growth investors might want to watch these four Chinese companies closely. Lately, they’ve shown more signs of institutional interest.

Tencent Music (TME) had a big day, rising 11% to 14.38 in the strongest volume in more than four weeks. The December IPO just surpassed an aggressive buy point. See an annotated chart and more explanations at IBD Leaderboard.

Mobile e-commerce expert Pinduoduo (PDD) and video site Bilibili (BILI) are working on new bases.

The Street sees Pinduoduo losing 44 cents a share in 2018, but then turning a profit of 4 cents a share this year.

China Mobile (CHL) has cleared a five-week flat base that is part of a gigantic saucer pattern. The wireless giant passed a 51.17 correct buy point and remains in buy range. The Street expects modest earnings gains of 5% in 2018 and 6% in 2019 for China Mobile.

Will This Chinese Telecom Succeed Again On Wall Street?

While China Mobile has long acted as a laggard stock, not a leader, since marking a multiyear high in 2015, don’t forget that during the 2003 to 2007 bull market, the large cap was a huge winner. In April 2015, the stock broke out of a long saucer with handle that presented a 17.23 proper buy point at the time. Volume during the week ended April 29 zoomed more than 70% above its 10-week average. That signified heavy institutional buying, the stuff of real breakouts.

China Mobile went on to rally 503% to a peak of 104 in the fourth quarter of 2007.

You can see a detailed daily, weekly and monthly chart for China Mobile at any time in its trading history by going to IBD’s top charting service, MarketSmith.

The iShares China Large Cap (FXI) ETF notched a ninth gain in the past 11 sessions, rising 1% to 41.37.

Please follow Chung on Twitter at @IBD_DChung for more on growth stocks, breakouts and financial markets. To see which companies are reporting quarterly results next week, go to the IBD Earnings Calendar.

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