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Tech Stocks Lead As Market Ends Mixed; Is Apple A Buy?

Apple and other tech stocks outperformed Tuesday as the key market indexes closed mixed after spending the session searching for direction.




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The Nasdaq composite finished with a gain of less than 0.1%, while the S&P 500 slipped 0.1% and the Dow Jones industrial average gave up 0.2%. Small caps lagged with the Russell 2000 down 0.3%. But the tech-heavy Nasdaq 100 rose 0.3%. Volume was higher on both the NYSE and Nasdaq, according to preliminary data.

Walmart (WMT), the biggest Dow gainer, jumped 2.5% after finding recent support at its 50-day moving average. The stock is building the right side of a potential flat base with a 100.31 buy point. Among other blue chips, Chevron (CVX), Apple (AAPL) and Microsoft (MSFT) added 1.6%, 1.4% and 1.3%, respectively.

Apple halted its three-session slide. The stock rebounded off its 10-week line, setting up a buy opportunity. It’s Apple’s first pullback to the support line since an Aug. 1 breakaway gap. Keep in mind: With the market uptrend under pressure, all buys are riskier than in a confirmed uptrend.

Bank of America Merrill Lynch reiterated a buy rating, citing strong handset upgrade interest among iPhone users. It also predicted Apple will report better-than-expected earnings next year, according to CNBC.

Automakers, health care and energy stocks led the upside in the stock market today. The biggest losers included building, chemical and gold mining stocks.

Tesla (TSLA) bounced 5% to halt a five-session skid. Shares are 14% below the 50-day line and 31% off their early August high. Macquarie Research began covering the electric carmaker with an outperform rating and a 430 price target. That’s a 66% premium from Tesla’s current price.

Energy Stocks Break Out

Energy stocks including EOG Resources (EOG), Helix Energy Solutions (HLX) and Tidewater (TDW) breaking out as West Texas intermediate crude prices rose 1% to nearly $75 a barrel. EOG rose 2% to clear a 131.70 cup-base entry. Tidewater surged 9% to take out a 35.10 buy point of a cup with handle. And Helix vaulted 5% to break out past a 10.52 cup-base buy point.

A couple of restaurant stocks scored tasty gains. Starbucks (SBUX) rose 2% in heavy volume as it shapes the right side of a lopsided base. Activist investor Bill Ackman reportedly disclosed a $900 million stake in the coffee chain. Ackman’s Pershing Square Capital now holds 15.2 million Starbucks shares.

Dunkin’ Brands Group (DNKN) leapt 3% to retake its 50-day line. Robert W. Baird on Monday reiterated an outperform rating on the doughnut chain, boosted its price target to 82 from 80.

Several IBD 50 growth stocks got hit Tuesday, including Ligand Pharmaceuticals (LGND), World Wrestling Entertainment (WWE) and Trex (TREX). The fell more than 3% each. Biotech Ligand sank 5% as it fell further below its 50-day line and extended its losing streak to seven.

On the flip side, Netflix (NFLX) and Grubhub (GRUB) were among IBD 50 top gainers with respective advances of 2% and 1.4%.

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