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Dow Stocks Trail As Small Caps Take Early Lead In 2019

Stock indexes are off to a fine start in 2019, as small caps claim the early leadership and the Dow Jones industrial average lags. Going into Friday’s session, the small cap Russell 2000 was up 7%; the Nasdaq, 5%; the S&P 500, 4%; and the Dow, 3%.




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In morning action Friday, the Dow fell 0.3%. The Nasdaq and the S&P 500 trimmed 0.4% and 0.2% respectively. Small caps in the Russell 2000 slid 0.5%.

Volume was up on the NYSE and down on the Nasdaq vs. the same time Thursday.

Blue chip stocks were mostly off. In the 30-component Dow Jones, Caterpillar (CAT) lost 1.1% and Goldman Sachs (GS) trimmed a similar loss to 0.5%. Intel (INTC) added 0.6% as it aimed for its 11th gain in the past 12 sessions.

Netflix’s Double-Bottom Base

In the large cap S&P 500, FANG stock Netflix (NFLX) gapped up 3.5% in heavy volume, climbing above its 200-day line. Credit Suisse cranked up its estimate for Netflix’s fourth-quarter subscriber growth. Netflix will report Q4 results after the close Thursday. It’s featured in the latest Earnings Preview column.

The stock chart for Netflix shows a double-bottom base under construction. The buy point in the W-shaped pattern is 386.90. Netflix’s weekly action has been strong. The stock rose 3.9%, 16.2% and is on track for a 12% pop this week.

Another stock working on a three-week win streak is homebuilder D.R. Horton (DHI). The weekly gains were 2.9%, 6.2% and so far this week 8%. Late morning Friday, Horton was up 1.5%.

The building sector lost about 31% in 2018, but the sector is up 5.7% so far this year. Horton, the second-biggest homebuilder in market cap, is up 15%. The stock is working on a yearlong, double-bottom base.

Wingstop Tries For Breakout

Marketwide, few stocks were breaking out Friday. Two stocks attempting breakouts were small cap restaurant chain Wingstop (WING), which is battling to move past a 72.10 buy point in a cup base, and cereal maker Post Holdings (POST), which is aiming at a 98.76 buy point in a double-bottom base.

Wingstop rose 2% Friday morning but Post’s early gain faded to 0.1%.

Double-bottom bases are fairly common in the current market rally. Sloppy market action can help the double bottom to form.

Small cap Fabrinet (FN) kept its loss small Friday, staying in the 5% buy zone from Thursday’s breakout. The contract manufacturer stock is trading at and near new highs.

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