The Nasdaq appeared on track for its third up day in a row midday Friday, as chip stocks did repair work from a recent pullback.
X Volume was mixed but little changed in today’s stock market vs. the previous session. The Nasdaq advanced 0.5%, while the S&P 500 added 0.4%. The blue chip Dow Jones industrial average inched up 0.3%. Small caps matched the Dow, tacking on 0.3% in the Russell 2000.
Chip groups rose 0.5% to 0.9% but were still 7% to 11% off recent highs. About four weeks ago, the chip sector was No. 1 among 33 sectors. Going into Friday’s session, the chip sector had fallen to No. 8.
In midday action, chipmaker Cypress Semiconductor (CY) rose about 1.5%. Chip designer Monolithic Power Systems (MPWR) about 2%. Chip equipment maker Ichor Holdings (ICHR) gained about 2.5%.
Each of the three stocks are trading under the 50-day line but above the 200-day moving average. Of the three, Monolithic is the strongest in its group. Monolithic is No. 5 in Stock Checkup at Investors.com.
Steel Breakout
Among the 197 industry groups, steel producers held the biggest gain for the day. Indiana-based Steel Dynamics (STLD) popped 3% in volume 54% above average as the midcap broke out of a six-week pattern within a larger consolidation. The buy point is 39.85 and Steel Dynamics briefly rose above that level Monday. The 5% buy zone stretches to 41.84.
China’s steel situation could affect steel prices. China’s steel production is on a downward path as antipollution measures take effect. The lower production might help prices.
Also, the Commerce Department recently announced that China and Vietnam violated anti-dumping agreements. Steel Dynamics filed the protest in September. Steel Dynamics CEO Mark Millett said the preliminary ruling “could be a meaningful positive tailwind for Steel Dynamics.”
Analysts expect Steel Dynamics is deliver a 22% increase in earnings to 55 cents a share in Q4.
Defensive Stocks Out Of Favor
Sectors taking a hit Friday included defensive areas such as tobacco and food and dairy. The defensive plays have been out of favor for months.
Blue chips were mostly up. In the 30-component Dow Jones industrial average, Microsoft (MSFT) led with a 2% gain and continues to form a base, while Coca-Cola (KO) retreated 1.5%.
In the IBD 50, most stocks were up. Universal Display (OLED) led with a 5% gain in heated volume thanks to a new supply deal. The stock is too extended to buy.
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