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Stock Market Erases Losses, Twitter Stock Up; Apple Bad News A Buy?

Apple got punched by sellers in Friday late-afternoon, dropping as much as 2.5% at the start, but shaved its losses. Plus, Apple’s sell-off hardly dented the Nasdaq composite. The index, in fact, turned a moderate early-morning loss into a slight gain. Overall, the key indexes reversed from moderate losses into positive ground in stocks today as new NYSE stock leader Twitter surged.

X

At 7645, the tech-driven composite edged up 0.2%. The leading index is off to a vigorous start in June, up nearly 2.7%. The S&P 500, up 0.2% as of 2:30 p.m. ET, also is doing well in June, rising nearly 3% for the month.

Apple (AAPL) was the only stock within the Dow Jones industrial average to fall 1 point or more. The next worst decline: an 88-cent slip by fellow tech leader Intel (INTC). The chipmaking titan sank 1.5% to 55, but volume is light. No sell signals are being triggered. The Dow Jones industrials rallied 0.2% after falling only 0.3% early.

See on a daily chart how Intel, up 19% year to date, holds a solid cushion above its fast-rising 50-day moving average and 10-week moving average.

For more on how to use the 10-week moving average correctly to determine to best time to sell, please check out the latest Inside The IBD 50 column, published every Friday on Investors.com and in IBD Weekly.

The Innovator IBD 50 (FFTY) fund rallied 0.6% to 36.05. It’s up 8.5% since Jan. 1, vs. a 3.8% advance for the S&P 500. The exchange-traded fund, which now shows an average daily volume of 209,000 shares, ran up 34% in 2017 while the 500 gained 19.4%.

A Tech Powerhouse Continues Its Turnaround

Apple is a member of IBD Leaderboard since May 4, when the megacap tech presented a correct entry point as it rallied sharply and rose past a 179.04 buy point in a seven-week double bottom.

While Apple is extended past the 5% buy zone from that entry, the stock has presented a new follow-on entry at 190.47 after forming a rare 3-weeks-tight pattern.

The iPhone, iPad and digital services giant fell on news reports that it plans to order fewer components for the iPhone in the second half of the year. Keep in mind, however, that the company continually innovates its formidable line of smartphones. Some media have reported that Apple is likely to introduce new versions in the fall.

Analysts surveyed by Thomson Reuters see Apple’s fiscal Q3 earnings bolting 31% higher to $2.18 a share on a 15% revenue increase to $52.27 billion.

For fiscal 2018, which ends in September, Apple’s profit is seen growing 25% to $11.49 a share. That would mark the biggest year-over-year increase since the Cupertino, Calif., company posted a 43% profit jump in FY 2015.

The Street sees revenue rising 14% for the current fiscal year to $260.87 billion. Apple’s market cap is currently $940 billion.

Lending Leader

BofI Holding (BOFI), highlighted as IBD’s Stock Of The Day, rebounded 1% to 44.47 in light turnover. The internet bank is still in buy range after clearing a 43.60 prime buy point in a five-week flat base.

Tesla (TSLA), highlighted in this earlier Stock Market Today feature, gained nearly 0.7% to 319.05 in active trade. The former big winner in 2013-2015 is still in the early stages of building the right side of a potential new base.

Twitter, A New Market Leader

Twitter (TWTR), in Big Cap 20, is getting even more extended from its 33.88 buy point in an eight-week cup with handle. The stock rushed more than 3% higher to 41.40 in volume running more than 25% above its 50-day average.

The social media network has now gained 21% past the proper entry. Taking gains in most stocks when you have a 20% to 25% profit is very sound portfolio management. But when you have supreme conviction in the company, holding longer may lead to stronger returns. But such stocks must have truly excellent fundamentals, high relative strength, and strong institutional sponsorship.

Real Institutional Buying

The Accumulation/Distribution Rating of Twitter stands at a positive B+ on a scale of A to E, according to Stock Checkup. This means that over the past 13 weeks, fund managers have generally been net accumulators of Twitter shares.

Twitter has scored four quarters in a row of earnings growth acceleration (from a 22% drop in Q1 2017 to flat growth the next quarter, then gains of 11%, 73%, and 129%). The Street sees Q2 earnings rising 113% to 17 cents a share.

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