Non-tech issues showed strength in late-afternoon trading Tuesday, pushing both the S&P 500 and the Dow Jones industrial average ahead of the Nasdaq composite.
X However, some of the marquee names int the tech world continue to show positive action and a few are presenting proper buy points.
Meanwhile, Apple (AAPL), which was highlighted at length in a Stock Market Today column on Monday, remains a legitimate buy today even as it makes good work on a potential new flat-base pattern. Why? Last week, Apple powered above its 50-day moving average for the first time in weeks, completing a good test of this intermediate-term support line after a stunning Jan. 6-9 breakout past a first-stage cup-with-handle base at 118.12.
Apple staged a new follow-on entry as it rallied above 149, and at 153.01, up 0.5%, shares are still within a proper buy range.
The stock's relative strength line continues to climb, a good sign. Shares are also just 2% below the 156.65 peak, which represented a 32.5% advance from the Jan. 6-9 breakout point.
The Dow Jones industrials, boosted by 1-point-plus advances by no fewer than nine of the 30 components, including Caterpillar (CAT,) JPMorgan Chase (JPM) and Wal-Mart (WMT), led the way with a gain of nearly 0.6%. At 21,641, the blue-chip index is up 9.5% since Jan. 1. It rallied 13.4% in 2016.
Cat has roared like a lion among big caps in 2017, rising 15% after breaking out of a 13-week flat base at 99.56 on April 25. The mining and construction gear firm reported a 37% rebound in Q2 profit to $1.49 a share, a big turnaround from a 22% drop in the year-ago period. Sales picked up 10% to $11.33 billion, accelerating from a 4% jump in Q1.
The S&P 500, helped by a solid rebound in the energy patch, rose 0.3% with a half hour remaining in the stock market today, while the Nasdaq lagged, up 0.1%. The Nasdaq, however, continues to tower over its peers with a year-to-date gain of 19.2%. The Nasdaq advanced 7.5% in 2016.
A strong consumer confidence report from the Conference Board (121.1 vs. the Econoday forecast of 117), combined with decent quarterly results, helped spread confidence across Wall Street. Meanwhile, the July reading for the Richmond Fed Manufacturing Index spiked to 14, smashing the consensus view of 8 and well above the revised reading of 11 for June.
Volume is up mildly on both main exchanges vs. the same time Monday.
The Russell 2000 rallied 0.9%.
Apple will report fiscal Q3 results after the close Aug. 2, a week from this Wednesday. The steady rise in its quarterly cash dividend (raised 10.5% to 63 cents a share in May), the possibility of stock buybacks, the likelihood of a resumption in double-digit EPS gains, and growing speculation in the next iPhone launch all appear to provide wind in the sails of the largest public company in the U.S.
Nvidia (NVDA), meanwhile, continues to act like leadership material. The top-class chip designer in hot new or growing markets such as deep learning, self-driving cars, and the data center is sharply extended after a May 10 breakout past a 121.01 cup-base entry. A brief pullback to the 10-week moving average in early July also justified the adding of shares to an existing core position.
However, notice on a daily chart how not only the 50-day moving average contained the recent decline, but also how the 168-170 price level is acting as a firm level of upside resistance. More than six weeks have passed since Nvidia's June 9 high of 168.50.
The 18% correction from head to toe is too deep for a flat base, but the current base could ultimately wind up being a cup or a double bottom.
A double bottom would be unusual, because the first low of the pattern formed just two days into the new base. Plus, while a middle peak of 161.74 and a second lower low has also been created, the base was not yet long enough to qualify as a sound double bottom.
Nvidia scores a nearly top-flight 98 Composite Rating on a scale of 1 to 99, as seen in IBD Stock Checkup. Earnings per share have risen 46%, 720%, 89%, 183% and 126% vs. year-ago levels in the past five quarters. The Street sees earnings jumping another 68% to 69 cents a share in the July-ending fiscal second quarter.
Revenue has jumped 13%, 24%, 54%, 55% and 48% vs. year-ago levels over the same time frame. Analysts see Q2 revenue rising 37% to $1.96 billion. Q3 revenue growth, however, is seen slowing to a 6% gain to $2.1 billion, due in part to tougher year-over-year comparisons.
Alphabet (GOOGL), down more than 3% despite a solid quarter issued late Monday (adjusted EPS up 27%, revenue up 21%), also shows the elements of a good double bottom. But the flaw in the chart was the fact that the base formed over six weeks. A good double bottom requires a minimum seven weeks' of action to wring out the uncommitted holders and set up a launching pad for the next big advance.
Watch to see if the Google website operator can hold the 50-day line, painted in red in an IBD daily chart, and rebound quickly back near the 1,000 level. That would keep its double-bottom pattern intact.
IBD's TAKE: There is just one other company that scores the same as Nvidia in Composite Rating within the fabless semiconductor industry group. To see the name, go to IBD Stock Checkup and punch in the ticker symbol "NVDA"; you can also compare any stock's EPS, RS, SMR and Accumulation/Distribution ratings with its industry group peers.
In other markets, the yield curve steepened a tad as the yield on the benchmark U.S. 10-year Treasury bond rebounded to 2.32%. The spread between the 3-month note and the 10-year bond rose to 116 basis points vs. roughly 108 basis points Monday.
WTI crude oil futures jumped 3.4% to $47.90 a barrel, the highest level since June 6.
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