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Stocks Reverse Higher As Many Stock Sectors Join In

U.S. stock indexes started on a weak note but reversed higher late Friday morning as a good mix of stock sectors scored a slew of new highs.




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The Nasdaq snapped back to a 0.2% gain, while the S&P 500 and the Dow Jones industrial average rose 0.1% and 0.2% respectively. Small caps held up a bit better as the Russell 2000 added 0.5%.

Volume was lower on both major exchanges.

Sectors with 10 or more stocks posting new highs included retail, medical, oil, software and financial. Bulls like to see action like this, with strength expressed among many different sources.

Retail stocks showing good action included Ollie’s Bargain Outlet (OLLI), up 1.5% in soft trade but in the 20% to 25% profit-taking level from a 77.60 buy point. Growth stocks tend to correct after reaching the 20% profit level from a legitimate breakout.

Leaderboard name Lululemon Athletica (LULU) popped 1% in below-average volume. The stock is about 33% extended from a bounce off the 50-day line in early August. While taking profits at the 20% to 25% level makes sense in most cases, Lulu may be an exception. Quarterly earnings have accelerated from 3% to 19%, 33%, 72% and 82% in recent quarters.

Comeback story Tractor Supply (TSCO) advanced 0.8% in below-average volume. Earnings declined 3% in Q4 vs. the year-ago result, but then earnings growth picked up 24% and 35% in the past two quarters.

Tractor Supply had a difficult 2017, with earnings rising only 2%, the weakest in nine years. The Street expects earnings to rise 25% this year.

Medical stocks also posted about a dozen new highs. Many of the stocks are too extended to buy.

One medical sector stock that has been rocketing higher is July initial public offering Liquidia Technologies (LQDA), a biotech stock that has lost money for 10 quarters in a row. In the late morning Friday, the stock rose 10% in heavy volume. Liquidia is thinly traded.

Other Stock Sectors

Oil, financials and software providing new highs included Oasis Petroleum (OAS), up 3% in heavy volume; fuel card company FleetCor Technologies (FLT), up 1% in slow turnover; and online language tutor Rosetta Stone (RST) up 2% in moderate volume.

(For updates on this story and other market coverage, check IBD’s stock market news today.)

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