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Stocks Rally As Nasdaq Closes Back Above The Key 50-Day Line

The Nasdaq composite led a broad stock market rally Friday, with indexes closing sharply higher after the April jobs report brought some relief and investors applauded earnings reports.

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The Nasdaq surged 1.7%, as Apple (AAPL) rallied on news that Warren Buffett increased his stake in the personal-technology company. The composite closed slightly above the 50-day moving average, a sign to chart readers that the index’s trend may be turning higher.

The S&P 500 advanced 1.3% and the Dow Jones industrial average added 1.4%. The small-cap Russell 2000 climbed 1.2% in a rally that saw broad participation. Advancers topped decliners by nearly 3-to-1 on the NYSE and by 5-to-2 on the Nasdaq.

Before the Nasdaq conquered its 50-day line, the S&P 500 and Dow made a positive signal Thursday when they found support at the 200-day moving average.

Volume was lower Friday, according to early figures. Software, steel, coal, food and some other consumer-related industry groups had the best increases in today’s market.

U.S. employers added 164,000 jobs in April, fewer than the 191,000 economists had forecast. But the unemployment rate fell to 3.9%, the lowest since 2000. Wage growth, the key number for stock market investors on edge about more Fed rate hikes, surprised on the downside, slipping to 2.6%.

Apple shares rallied after investor Warren Buffett said he raised his stake. Buffett’s Berkshire Hathaway (BRKB) bought 75 million shares of Apple in the first quarter. Buffett disclosed the share purchases on CNBC late Thursday.

Apple stock topped the 179.04 buy point of a double-bottom base Friday morning in heavy volume, leaping 4%. That puts the stock in buy range. Already the largest stock with a market capitalization of more than $930 billion, Apple is making a bid to become the first company with a market cap of $1 trillion.

The Buffett news capped a bullish week for Apple, which gapped up Wednesday after earnings and sales for the March-ended quarter beat expectations. The company guided sales higher for the current quarter and announced a dividend increase plus a new $100 billion share buyback.

Some companies that fell on earnings pared losses or even reversed higher, a sign of the broad buying on Wall Street today.

Arista Tumbles, Alibaba Rises

Arista Networks (ANET), a stock in the IBD 50 and Sector Leaders, plunged after earnings beat estimates but the company’s outlook was soft. Arista reduced its loss to 8.5%. Arista’s current base has an oscillating shape, not the smooth price contours that characterize the best bases.

Alibaba (BABA) reversed higher after the Chinese internet giant’s earnings beat expectations and it forecast full-year revenue growth of 60%, well above views. The stock is still forming a double-bottom base with a 201.60 buy point, and it climbed back above the 50-day line.

The restaurant industry group has been rising rapidly, and on Friday Shake Shack (SHAK) soared to the highest share price since August 2015. It closed with an 18% gain. The burgers and fries chain gapped up more than 22% in huge volume after quarterly results beat views and the company raised its full-year sales and same-store sales estimates. The stock already had broken out of a cup with handle with a 44.50 buy point.

Sarepta Therapeutics (SRPT) broke out of a cup-with-handle base after the company’s earnings topped views. The stock is extended now. The biotech topped an 83.98 buy point in heavy volume. The relative strength line made a new high, bolstering the breakout. But Sarepta shares already have made a sizable advance from a breakout in July.

The company late Thursday reported an adjusted loss of 28 cents a share and revenue of $64.6 million, a 295% increase. Sarepta also announced a collaboration with Myonexus Therapeutics to develop five gene therapies to treat rare neuromuscular diseases, and a delay in launching its eteplirsen treatment in Europe.

RealPage (RP) rallied above the 56.51 buy point of an ascending base and closed extended from that entry. The chart also could be interpreted as a flat base, with shares now back above a 55.05 buy point. The provider of software for rental property management posted adjusted earnings of 37 cents a share, above views. Revenue of $201.3 million in Q1 was a 32% increase vs. a year ago.

Energy stocks are bubbling up, and on Friday Cheniere Energy (LNG) broke out of a cup-without-handle base. Cheniere topped the 60.32 buy point in heavy trading after the natural-gas terminal operator beat Q1 sales and profit expectations. The relative strength line made a new high, bolstering the breakout.

The Houston-based firm also raised its full-year guidance. The company cited pricing in liquefied natural gas that’s “stronger and more durable than we previously forecast.” Cheniere was on the watch list for IBD Leaderboard. Its shares remain in buy range.

RELATED:

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