Nasdaq Rises In Mixed Stock Market; When Is ItTime To Buy Apple?

Wall Street showed mixed stock market action in afternoon trade Friday, with the Nasdaq holding its command over other indexes. The tech-filled composite index rallied 0.1%, setting up a likely weekly gain of more than 1%.


Apple (AAPL) helped the Nasdaq’s cause, lifting 0.7% to 189.51 in very quiet turnover. At that price, the iPhone giant is now extended past the 5% buy zone after the leading megacap tech bolted past a 179.04 proper buy point in a seven-week double bottom.

The double bottom must be a minimum seven weeks. This key chart pattern should feature two distinct sell-offs, with the second low undercutting the first low.

This is not a new pattern, but repeated often by great stock market winners in many of the past bull market cycles. Former big market winner Nokia produced one in the fall of 1998. More recently, Palo Alto Networks (PANW) did the same in the summer of 2015.

At 2:30 p.m., the S&P 500 and the Dow Jones industrial average edged around 0.3% lower. The S&P SmallCap 600 fell 0.2%. The 600 continues to outperform its large-cap sibling, rising 7.1% since Jan. 1.

The 500, at 2719, is up just 1.7% year to date, but the key index looks poised to close above the 50-day moving average for a third week in a row.

Keep Watching Security Software Stocks

Palo Alto joined Leaderboard at the time. Now, Apple is a member of IBD’s premium stock picking and chart-annotation service.

The security software firm also bucked the large-cap market’s general malaise, up nearly 0.6% to 210.53. Palo Alto has now rallied 34% past a 156.95 entry during a Jan. 18 breakout.

Earnings have risen 62%, 47%, 33%, 39%, 35% and 37% vs. year-ago levels in the past six quarters. The Street expects Palo Alto to further build on that impressive record of bottom-line growth. Analysts on consensus see earnings in the April-ended fiscal third quarter rising 57% to 96 cents a share.

Also in IBD’s security software industry group, new IPO Okta (OKTA) propelled ahead more than 2% to a new high of 51.97. Shares in the identity and access management expert are now up 21% past a 42.98 buy point in a second-stage base.

A good offense-type sell signal to employ? Take at least some profits off the table when your stock breaks out and rises 20% to 25% past the proper entry.

You can decide to hold a bit longer and see if that gain can reach the 30% to 40% level or more. But stay mindful of any key defense-type sell signals, including a big dive below the 50-day moving average in huge volume.

A big drop in crude oil prices Friday is sending many leading energy stocks down hard, showing why the 20% profit sell rule is a good one to keep, especially during a choppy market such as the first five months of 2018.

Crude Sinking, And So Are Bond Yields

Volume is running sharply lower vs. the same time Thursday ahead of the three-day Memorial Day holiday weekend.

Crude oil futures got walloped as WTI near-term futures fell more than 4%. The yield on the benchmark U.S. Treasury 10-year bond sank as low as 2.92%, well below its recent new seven-year peak of 3.11%.

Going back to Apple, the company is getting decent ratings from IBD Stock Checkup, shows prospects of continued profit growth, and has earned big institutional sponsorship from Warren Buffett as well as growth-style fund managers.

According to data from William O’Neil + Co., Apple showed 5,234 mutual funds and hedge funds owning shares at the end of the first quarter of 2018. That’s slightly down from 5,276 funds in December 2017.

Apple began its dramatic stock market turnaround on Jan. 6, 2017, when the stock busted out of a first-stage cup with handle and surpassed a 118.12 buy point.

A Streaming King

Since then, the stock has vaulted as much as 61%. Apple’s market cap is now $926 billion.

Netflix (NFLX), meanwhile, continues to see rising fund sponsorship. Please read this Stock Spotlight column on the details.

The streaming video titan is still in the 5% buy zone after rushing past a 338.92 new buy point in a flat base that barely qualifies in length of time. In a flat base, the drop from head to toe should not exceed 15%. In Netflix’s latest base, the correction was a super-mild 13.6%.

That correction follows Netflix’s 65% run after shares rushed out of an earlier flat base with a 204.48 buy point.

That breakout occurred on Jan. 3.

Netflix is also a member of IBD Leaderboard.


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Originally posted 2019-09-19 23:15:11.


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