Investors preferred to continue investing in U.S. stocks and trimming their stakes in Bitcoin-related securities on Tuesday as the Nasdaq continued to stage one of its biggest month-to-date gains.
The Nasdaq composite rallied 0.7% while the Nasdaq 100, capturing the 100 largest nonfinancial companies on that exchange, rose 0.8%.
Bitcoin Investment Trust (GBTC), meanwhile, flashed a warning sign that a prolonged correction may be in the works. The popular fund dropped 2% to 1,653.90, sinking for a third straight session and giving back all of last Thursday's strong rebound. The fund is also losing more ground below its critical 50-day moving average.
Bitcoin Investment Trust gave astute chart readers a pair of sell signals in December when it showed some clear signs of a climax run, one of the most important sell signals featured in IBD market columns. Bitcoin also slashed through its 10-day moving average, a good sell trigger for short-term traders.
The PowerShares QQQ Trust (QQQ), which tracks the Nasdaq 100, is now at 169.49. The heavily traded ETF extended its overall gain since a Day 3 follow-through on June 30, 2016, to more than 57%. A follow-through is a vital market-turning signal that was noted by The Big Picture back then. Typical follow-through rallies occur on the fourth day or later after an initial rally attempt that follows a significant market correction.
Meanwhile, some blue chips took a break as the Dow Jones industrial average finished practically at breakeven. At least seven of the 30 member stocks in the Dow Jones industrials fell 1 point or more, including Johnson & Johnson (JNJ) following its plan to take a $13.6 billion charge following the new tax code and repatriate billions in profits back into America immediately. The company also suffered a setback in court over a drug patent.
The S&P 500 lifted 0.2%. Breadth was positive on both exchanges; on the Nasdaq, winners smashed losers by a nearly 4-3 margin. NYSE winners crushed losers by nearly 9-to-5.
J&J slid 4% to 141.83 in heavy turnover, but the uptrend remains in place as the diversified medical products giant remains above its 50-day line. At its recent peak, the stock held a 14.9% profit since clearing a 129.10 buy point in a long base on base, a key pattern for those who want to buy the most bullish growth stocks.
Apple (AAPL) edged slightly higher to 177.04 and trades just a few points off its all-time peak of 180.10. At that peak, the largest company in the U.S. exchanges by market cap ($900 billion) has run 52% since the pivotal breakout from a cup with handle at 118.12 on Jan. 6, 2017.
Apple is also up nearly 10% from its latest true base, a second-stage cup with handle that provided a 160.97 entry. The base formed from Sept. 5 to Oct. 26. Volume on the Oct. 27 breakout came in strong, 64% above the 50-day average. It later tried to break out from a flat base at 176.34 but has not climbed much from that entry.
While the iPhone and digital services titan has sort of set the standard over the past 12 months on how a giant company can turn things around and rally nicely from key breakouts points, the market's rally across techland means that IBD-style growth investors can possibly find other big cap names that could present even richer stock profit potential.
Four names to consider include:
Lam Research (LRCX), a play on semiconductor equipment, $34 billion market cap: The stock rallied nearly 3% to 215.05 and is crafting the right side of a new cup-style base since peaking at 219.70 on Nov. 21.
Lam, which had been regularly featured in IBD Big Cap 20 throughout 2017, is expected to grow fiscal second-quarter earnings by a whopping 64% to $3.68 a share. In contrast, Apple's profit in the just-ended fiscal first quarter is expected to rise 13%.
PayPal (PYPL), digital payments pioneer, $101 billion market cap: The stock floated 0.2% higher to 84.18, a fifth straight gain, and is now up 5.9% past the recent breakout from a good flat base at 79.48. Shares are thus a tad extended from the proper buy zone.
Earnings are seen rising 24% to 52 cents in Q4, following year-over-year gains of 13%, 17%, 19%, 28% and 31%.
Salesforce.com (CRM), a business software innovator, $81 billion market cap: The Marc Benioff-led cloud-based enterprise software giant is nominally in buy range at 113.24, 3.6% above a 109.29 entry in a six-week flat base.
Earnings in the January-ending fiscal fourth quarter are seen rising 18% to 33 cents a share following EPS increases of 26%, 14%, 47%, 17%, 38% and 62% in the prior six quarters. The average gain over the time span: up 34%.
(Follow Saito-Chung on Twitter at @IBD_DChung for additional commentary and analysis on growth stocks, charts and financial markets.)
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