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Chip Stocks Help Nasdaq; Apple Crushing Indexes

Chip stocks Intel and Nvidia paced the market upside in stocks today. Meanwhile, major indexes inched into positive ground during afternoon trading Friday. But the Nasdaq is likely to finish lower in September, including Apple.




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The Nasdaq is up 0.1% while the Dow and the S&P 500 rallied roughly 0.2%.

Small-cap indexes outperformed on Friday. The S&P SmallCap 600 rebounded 0.6% but remains below its rising 50-day moving average. The S&P 600, at 1064, is likely to close the month down 3.1%.

However, the S&P 600 still leads the S&P 500 in year-to-date performance, up 13.7% for the former vs. up 9% for the latter. The Nasdaq, still the top index in 2018, is up 7.3% since July 1, and has a 16.6% gain so far this year.

Apple (AAPL), still the biggest company by market cap on all U.S. exchanges, traded flat at 224.87. The iPhone giant looks poised to finish September with a 1.2% loss but is up 32.9% since Jan. 1 following a 46.1% advance last year.

The iPhone, Apple Watch, MacBook and digital services seller continues to show no defensive sell signals. A recent new buyer could decide to lock in some profits based on the 20%-25% rule. That is, the stock has now achieved a 25% gain since it cleared a perfect double bottom base with a 179.04 correct buy point on May 4.

Why Apple Remains A Leader

The Street’s profit forecasts for Apple continue to get revised higher. Analysts on consensus see earnings up 28% for the current fiscal year ending in September to $11.78 a share and increasing 16% to $13.71 in fiscal 2019.

Apple’s earnings per share have shown an important accelerating trend, rising 2%, 11%, 18%, 24%, 16%, 30% and 40% vs. year-ago levels in the past seven quarters.

Sales jumped 3%, 5%, 7%, 12%, 13%, 16% and 17% over the same time frame.

Apple also has a growing quarterly dividend, currently at 73 cents per share. The annualized yield of 1.3% is not that much lower than the 1.8% average for the S&P 500.

Chip Stocks Help Indexes, Banks Hurt

The Dow Jones industrial average edged up less than 0.1%, despite drops of 1 point or more from its banking components Goldman Sachs (GS) and JPMorgan Chase (JPM).

Intel (INTC)helped lead the upside within the 30-stock Dow. The semiconductor manufacturing giant rose more than 3% in heavy turnover on news that it’s making progress with a new 10 nanometer silicon wafer format for chipmaking.

Intel shares are still in an early basing phase and still appear to encounter resistance at the falling 50-day moving average.

Archrival Advanced Micro Devices (AMD), one of the hottest tech stocks in 2018, dropped 5% to 30.92 in fast trading. However, AMD has a huge cushion above its rising 50-day moving average and may be in the middle of forming a high, tight flag base.

Chip Stocks In Leaderboard

Nvidia (NVDA), a Leaderboard member, soared 5% to 281.59 in strong volume on a big price target hike by Evercore ISI, from 300 a share to 400. The stock is still within the 5% buy zone after a re-breakout past a 269.30 buy point in a flat base.

Also in IBD Leaderboard, recent new addition CarGurus (CARG) fell 1.4%. However, even at the session low of 55.04, the e-commerce play still shows a shiny third-quarter gain of 58%.

CarGurus went public at $16 a share on Oct. 12 last year and is massively profitable.

The Cambridge, Mass., firm lost 2 cents a share in 2015, then drove into the black with a net profit of 6 cents a share in 2016 and 15 cents in 2017. The Street sees earnings surging 53% this year to 23 cents a share and another 35% in 2019.

CarGurus Top Line Is Top-Notch

Sales more than tripled from $99 million in 2015 to $317 million last year.

In addition to midcap growth play CarGurus (its market value is now $6 billion, with 109 million shares outstanding), four more stocks among the 13 currently on the Leaders list of Leaderboard represent strength, fast growth, excellent management and innovation in the consumer spending and retail sectors.

Please follow David Saito-Chung on Twitter at @IBD_DChung for more on growth stocks, chart analysis, breakouts and financial markets.

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