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Dow Jones Rallies As Bitcoin, Techs Rebound; What Is The Next Play For Boeing?

Boeing (BA) helped spearhead a decent rebound for stocks on Tuesday as the Dow Jones industrial average component rose 8.38, or 1.7%, to 330.82 and retraced all of Monday’s 1.9% drop. At least nine of the Dow industrials’ 30 components advanced 2 points or more.

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Boeing recouped all of Monday’s losses. While the Dow industrial average component is now spending its fourth week trading beneath the 50-day moving average, such action is normal for a big market leader that’s taking a break. Watch for a potential new base to form, which sets up a potential buy point. But breakouts tend to work much better when the market status exits a correction.

The Dow transports jumped more than 2%, suggesting that the greater economy is still fine. Last week, U.S. fourth-quarter GDP was revised to a 2.9% lift, up from the first revision of a 2.5% increase and better than the Econoday consensus forecast.

The Nasdaq composite rallied 1%, just below a 1.3% gain for the S&P 500. The Dow utility average lagged, up just 0.3%. Volume fell mildly on both exchanges but was likely above average, according to early data.

Top-rated companies in the leisure, automaker, e-commerce, software and chip equipment industry groups outperformed. Wood product, airline, oil drilling, oilfield services, home medical care, tobacco and paint stocks also rose sharply; these IBD industry groups all gained 2.5% or more.

Boeing ignited its fierce rally Oct. 26, 2016, by clearing a 139.55 buy point in a superlong saucer with handle. Given that the advance reached as much as 165%, the current correction looks perfectly normal.

A base that forms while preventing Boeing shares from penetrating their long-term 200-day moving average would add a bullish element to the overall picture.

Analysts polled by Thomson Reuters expect Q1 earnings to fly 27% higher to $2.56 a share.

While the 83 Composite Rating for Boeing on Stock Checkup is so-so, keep in mind that the stock is in a turnaround not unlike the one Apple (AAPL) engineered in 2017. Plus, Boeing’s RS Rating remains a stout 95.

This means Boeing has outperformed 95% of all publicly traded companies in IBD’s database over the past 12 months.

In other markets, Bitcoin Investment Trust (GBTC) hopped back above the 200-day moving average, rising 12% to 12.55. The Bitcoin-tracking fund is still down more than 43% year-to-date.

The yield on the benchmark U.S. Treasury 10-year bond edged up to 2.78%. According to CME Group, fed funds futures traders see only a 30% chance that the Federal Reserve will lift interest rates by a quarter-point four times this year. The majority expects the target rate to reflect three rate hikes, sending the fed funds rate to a range of 2% to 2.25%.

(Please follow Saito-Chung on Twitter at @IBD_DChung for more analysis and commentary on growth stocks, bases, chart patterns, and financial markets.)

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