This Index Beats S&P 500; Will 5 Tech Stocks Break Out?

The Dow Jones Industrial Average, S&P 500 and Nasdaq composite packed in gains of 1.2% to nearly 1.4% Tuesday as investor optimism spread visibly in stocks today. Volume ran at a significantly higher rate vs. the same time on Monday on both main exchanges. Reports late Monday that the U.S. Congress took a major step toward avoiding another debilitating partial government shutdown encouraged fresh buying.


Breakouts continued to perform well.

As another sign of confidence in the overall economy, transport issues advanced sharply. The Dow Jones transportation average rallied 1.3%. At 10,439, it’s now risen 13.8% year to date, outperforming a 9.4% lift for the S&P 500.

The Dow transports include railroad, trucking, airfreight and airline stocks. Spirit Airlines (SAVE), which joined Leaderboard as an earnings options play, gained as much as 2% before stepping back. The stock formed an eight-week cup with handle, producing a 62.07 buy point.

Many of the biggest stock market winners going back to the late 1800s produced key bases such as the cup with handle, flat base, double bottom and others before breaking out to new highs and making huge price runs.

Xilinx Leads Top Tech Stocks

On IBD Leaderboard, strong moves by market leaders held nicely. Xilinx (XLNX) barreled into new high ground, rising 3% to as high as 118.41 in heavy turnover. The sole chip firm among 14 individual stocks on the “Leaders Near A Buy Zone” and “Leaders” lists, Xilinx has now trampolined more than 20% past a 98.10 alternate buy point.

Xilinx issued an alternate buy point with its breakaway gap, spurred by a strong earnings report.

Among Tech Stocks, The Chips Are Coming Back

Xilinx, capitalizing on growth trends in the wireless and data center markets, has demonstrated fundamental excellence lately. Earnings per share have lifted 27%, 30% and 42% vs. year-ago levels in the past three quarters. Revenue growth has accelerated over that time frame, going from 5% to 14% to 19% to 34%.

Watch for a potential follow-on buy point to emerge, including a light pullback and rebound off the 10-week moving average.

Stocks on Leaderboard achieved a gain of 11.8% on a portfolio-weighted basis in 2018. A full position on Leaderboard equated to one-eighth of the entire cash-only portfolio. A half position occupied one-16th of the portfolio. The S&P 500 lost 6.2%, excluding dividends, last year.

Spirit Airlines Having A Sound Start In 2019

Last week, the ultra-discount passenger carrier reported outstanding Q4 results. Earnings soared 92% to $1.38 a share, boosted in part by a 6% drop in the year-ago period. But revenue jumped 30% to $862.8 million. That increase meets the C (current quarterly earnings per share) in CAN SLIM, IBD’s seven-point investing model for finding great stocks.

Norfolk Southern (NSC), which issued bullish targets in its future operating ratio, added another 2% after rising more than 3% on Monday. The stock is climbing past a 175.56 correct buy point in a long double-bottom base.

Defensive issues lagged. The Dow utility average rose 0.5%. Gold and silver mining issues declined.

Tech Stocks And Bases

Meanwhile, keep an eye on the price-and-volume action in these emerging leading tech stocks.

Corning (GLW): 34.21 entry in a double-bottom base. Wall Street sees earnings up 14% in 2019 to $2.03 a share.

Fortinet (FTNT): 94.47 potential buy point in an emerging cup base. The security software firm’s relative strength line has been rising nicely for more than three weeks. Fortinet has long inhabited the IBD 50.

Autodesk (ADSK): 150.51 buy point in a choppy base with elements of a double bottom. IBD Stock Checkup gives the industrial design software expert a 96 Composite Rating on a scale of 1 (horrible) to 99 (excellent).

Intuitive Surgical (ISRG): 581.22 entry in a choppy base that nonetheless carries elements of a cup base. The correction within the base from head to toe is mild at 26%. An aggressive entry at 549.08 also is justified. The leader in robotic surgical systems and large cap leader in the medical equipment field is expected to grow profits 9% to $12.15 a share in 2018 and 16% in 2020.

Adobe Systems (ADBE): 260.82 buy point, double bottom. The stock has been a huge winner since the market turned in late 2012. Earnings in the February-ending fiscal first quarter are seen rising just 4% to $1.61 a share.

In Other Financial Markets

Crude oil rallied sharply. WTI near-term futures gained 2% to $53.47 a barrel. Long-dated U.S. Treasury bonds fell, sending yields higher. The benchmark 10-year note garnered a yield of 2.68%, up 3 basis points and still above 2.66% on Jan. 2.

Please follow David Saito-Chung on Twitter at @IBD_DChung for more on growth stocks


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Originally posted 2019-09-19 23:33:31.


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