Stock Market Today: Nasdaq Up; Auto Chip Stock Breaks Out; Why Apple Is Still In A Buy Zone | Stock News & Stock Market Analysis

The stock market showed it’s being stingy with its losses following Wednesday’s dramatic rebound. The Nasdaq composite, the top index in 2017, jumped off its mild intraday lows and edged slightly higher in the late afternoon Thursday.

X The Nasdaq, a 1.1% winner on Wednesday, was down all of 0.3% in the early morning before turning higher. The Nasdaq 100, which tracks the 100 largest nonfinancial stocks on that exchange, rose roughly 0.1%.

Chipmakers and semiconductor equipment plays continued Wednesday’s solid rebound, and STMicroelectronics (STM) broke out, clearing a 24.90 buy point in a 10-week flat base. The stock gapped up bullishly at the open and is up nearly 3% to 24.97. The buy zone goes up to 5% past the 24.90 entry, or 26.15.

Silicon wafer etching systems expert Lam Research (LRCX) fell less than 1% to 203.66 in heavy volume, but the pullback looks normal following a strong gain Wednesday.

Watch to see if Lam can remain above its 50-day moving average as the stock attempts to form a new base, which could provide a brand-new proper buy point.

The strength in tech is helping the S&P 500 rally off its lows. The large-cap benchmark is off just 0.3%. At 2798, it’s up 4.6% year to date.  Top-performing industry groups include movies, market research, specialty retail, design software, paint and lodging shares, all up 1% as a group or more.

The Dow Jones industrial average slipped more than 0.3% lower. The Russell 2000 is off 0.4%.

Volume is running lower vs. the same time Wednesday on both main exchanges.

Apple (AAPL), meanwhile, continues to act like a market leader ever since it turned fortunes around for investors with its breakout on Jan. 6, 2017, from a first-stage cup with handle at 118.12. IBD’s Stock Market Today had featured that breakout at length. Today, shares are up just 0.3%, but at 179 the gain from that prime entry point has now reached 51%.

Long-term investors have no reason whatsoever to sell. Apple has not triggered any defense-type sell signals, such as a severe drop below the 50-day line or 10-week moving average in massive volume and failure to recover. Rather, the iPhone, iPad and digital services innovator is actually in buy range for those who wish to add a small amount of shares to an existing position.

Why? The stock recently bounced off its 10-week moving average near 173 following a solid breakout on Oct. 27 past a new cup with handle that formed from Sept. 5 to Oct. 26. This new base presented a key buy point at 160.97, and just a few weeks ago Apple made its first pullback to the 10-week moving average.

A solid rebound off this medium-term support and resistance level offers a follow-on entry point. Buying more shares in a rising stock gives a savvy growth investor a chance to compound one’s return. It’s best to buy as close as possible to the 10-week line once the rebound is moving.

Apple is expected to grow profits in the double digits for a fourth straight quarter as analysts polled by Thomson Reuters see earnings up 13% to $3.78 a share in the fiscal first quarter ended in December. Earnings have grown 2%, 11%, 18% and 24% vs. year-ago levels in the prior four quarters as sales picked up 3%, 5%, 7% and 12%.

Going back to STMicroelectronics, the decline within the base from intraday to intraday low is 15.5%, hitting the maximum decline allowed for a good flat base. One could also view the chart action as a shallow cup base with no handle.

Either way, the action within the base is generally sound. After a more than 200% rally following an October 2016 breakout from a first-stage bottoming base pattern, STMicro has been stingy with giving up those gains.

Two concerns remain. There are no up weeks in price in heavy weekly turnover within the latest base, and two sharp down weeks in massive volume. However, in the prior two weeks, STMicro showed strong gains in rising weekly turnover vs. the prior week. One could view that as a form of institutional accumulation.

Plus, such recent heavy buying is reflected in STMicro’s positive Accumulation/Distribution Rating, a B on a scale of A to E, as seen in IBD Stock Checkup. A grade of C+ or higher indicates that fund managers have been net buyers of the stock over the past 13 weeks.

The Swiss chipmaker focuses on industrial markets including cars. It’s staged a stunning turnaround in both the top and bottom lines following lousy results from 2013 to the first half of 2016.

Revenue rose 2% in the third quarter of 2016 to $1.8 billion, ending a three-year-plus slump in sales, then accelerated to gains of 11%, 13%, 13% and 19% vs. year-ago levels in the four most recent quarters. Earnings have been superb over the same time frame and include year-over-year increases of 325% and 155% in the past two periods.

The Street sees earnings up 133% to 35 cents a share in Q4 of last year. Growth should continue to be bright in 2018, with earnings seen rising 34% to $1.25 a share on a 12% bump up in sales to $9.25 billion. That would mark the highest annual sales since 2011.

STMicro’s Composite Rating is a solid 93 on a scale of 1 to 99.

Elsewhere, WTI near-term crude oil futures inched up 0.1% to $64.05 a barrel; prices eclipsed the $60 level on Dec. 29.

The yield on the benchmark U.S. Treasury 10-year bond rose to 2.60%, just 2 basis points shy of eclipsing the March 2017 high of 2.62%.


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Originally posted 2018-01-19 08:22:36.


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