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Dow Up, But Nasdaq Stalls, Chip Stocks Reverse Badly; Sell Apple Now? | Stock News & Stock Market Analysis

Apple (AAPL), one of the true tech forces in an outstanding 2017 for the Nasdaq composite, showed poor action Thursday, closing below the 50-day moving average. The megacap tech’s 1.8% drop to 171.11 came in above-average volume, the second straight heavy-volume decline.

X The Nasdaq, also hurt by some wild trading in the semiconductor sector, edged less than 0.1% lower but the Dow Jones industrial average, boosted chiefly by its industrial components such as United Technologies (UTX), 3M (MMM) and Caterpillar (CAT), rallied more than 0.5%.

The S&P 500 added less than 0.1%. Deep declines in homebuilding, airline, chip equipment, RV, automaker and gold mining shares hurt the major U.S. indexes. The Dow transports sold off again, losing 1.6%.

The S&P SmallCap 600, however, led the day with a 0.4% lift.

Volume on the NYSE and Nasdaq dropped from Wednesday’s levels, according to initial data.

Watch to see how Apple finishes for the week. For now, an 11.9% gain since the iPhone and digital services titan from an Oct. 27 breakout past a second-stage cup with handle at 160.97 has been whittled down to 6.2%.

One of the key sell rules in IBD investing: Don’t allow a 10% gain or more in a stock turn into a complete round trip.

Those with outsized gains in Apple, however, have the luxury to be patient and see if institutional investors see the recent sell-off as a brand new opportunity to buy shares and shore up the stock. As seen in a weekly chart, Apple is trading only 1% below the 10-week moving average, which moves similarly with the 50-day line on a daily chart.

Apple began its impressive run back on Jan. 6, 2017, when it rallied out of a bottoming base pattern. Back then, it formed an excellent cup with handle that presented a proper buy point at 118.12.

Since then, Apple’s fundamentals have greatly improved, and the company has even posted mild double-digit growth (EPS up 11%, 18%, 24% in the past three quarters, revenue up 12% in fiscal Q4).

However, as reported by IBD tech writers, some analysts are concerned about the sales figures of Apple’s latest iPhone X.

For now, the fiscal Q1 EPS estimate has not changed as Wall Street on consensus sees earnings up 13% to $3.80 a share.

Elsewhere, chip equipment leader KLA Tencor (KLAC) dropped nearly 2% to 113.16 after being up as much as 5.9% intraday. The stock’s uptrend is still intact, but continued negative reversals in heavy turnover would indicate that some institutions are heavily taking profits.

On Dec. 18, KLA bolted past a 110.11 buy point in a base on base, but the ride has been volatile.

Bitcoin Investment Trust (GBTC) rose nearly 1% to 1,686, gaining for a second straight session. But the fund still lies beneath its rising 50-day moving average. Shares are also still 52% below a 3,522 peak.

Gold futures fell, sending the SPDR Gold Shares (GLD) ETF down 0.8% to 127.93 in double normal turnover. Watch to see if the popular exchange-traded fund can climb back above a recent breakout point at 128.42.

 

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