Stocks cooled off in the first 45 minutes of trading Thursday, but a confirmed uptrend remains in place. A few oil explorers continued to rally on the back of a surprise decision by OPEC to cut production modestly.
Parsley Energy (PE), an oil and gas play in the Permian Basin in the West Texas area, continued to rebound further above its critical 50-day moving average, up more than 1% to 33.18. The midcap name has vaulted 63% since clearing a base with a 20.43 buy point that formed from late November to early March.
The Nasdaq edged 0.4% lower, following Wednesday's 0.9% upward thrust. But the S&P 500 and Dow Jones industrial average bounced off opening lows and were down about 0.1%.
On the Dow, Caterpillar (CAT) led the upside, rising 2% to 88.73 and moving further past an 84.83 entry point on a monster-sized cup with handle.
The 5% chase zone in CAT shares extends up to 89.07. Buying a stock way extended past the proper entry can result in a quick sting of a loss if the stock makes a normal pullback back near or to the breakout point.
Small caps fell just a touch more; the Russell 2000 was off nearly 0.5%. West Texas Intermediate crude oil futures edged nearly 0.3% higher to $47.17 a barrel.
Chinese e-commerce firms caught their breath, yet remain leaders.
Alibaba (BABA) staged a gap down in price, something it hasn't done since June 24. The Chinese B-to-B and B-to-C e-commerce titan fell more than 3% to 104.79, yet at that price, the stock is still up a handsome 23% from its recent breakout from a long bottoming base at 85.10.
In a downward price gap, the stock falls so hard that its intraday high for the session is actually lower than the previous day's intraday high, thus creating a gap. Gaps can be formed on weekly charts as well.
Given that the bull market is very mature time-wise, it makes smart sense to use IBD's "platinum rule" of selling — that is, take at least partial profits when your stock has risen 20%-25% from a proper pivot point. The proper pivot arises when a high-quality stock bursts out of historically proven chart patterns that great stock market winners over the past century have created, including the cup with handle, flat base, double bottom, saucer and ascending base.
The 5% chase zone extends up to 115.85.
Amazon.com (AMZN) also padded recent gains as the company continues to be a force in retailing, digital services and unique consumer devices such as its Echo digital butler. Shares grew another 0.7% to 834.70, up more than 30% past a 638.11 cup-with-handle entry.
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