The Dow Jones industrial average paced mild gains Tuesday as eight of its 30 components, including Boeing (BA), health care sector leader United Health (UNH) and Caterpillar (CAT) jumped 1 point or more. Boeing, rising 5.72 to 337.48, gave a strong signal that its long-term rally is far from over.
XTechnically, though, the maker of passenger airliners and airplane bombers still triggered a short-term sell signal Wednesday, when shares cut through the 50-day moving average in heavy turnover. It was the first such trip below the medium-term support line since Boeing's first-stage breakout at 139.55 in late October 2016.
The Dow Jones industrials gained 0.5%, while the Nasdaq added nearly 0.3%. The S&P 500 rose less than 0.2%. Big rallies among solar, desktop software, Canadian oil and gas, computer networking, specialty enterprise software and fabless semiconductor shares offset a sell-off among wholesale drug distribution, food, automobile retailing, steel, hospital and long-term medical care firms.
The Innovator IBD 50 (FFTY) ETF jumped 1.7%.
Ten of the 12 names on Leaderboard, a hand-picked selection of top growth stocks with daily and weekly charts annotated in real time by IBD's markets team, saw gains of 1% or more Tuesday.
Breadth was negative on both main exchanges, a curious divergence amid the gains by the major indexes. Falling stocks beat gainers by a nearly 5-4 ratio on the NYSE and 15-to-14 on the Nasdaq.
The Accumulation/Distribution Rating of E on the S&P 500 (see it via the General Market Indicators page link at the bottom of IBD's daily Big Picture column) reflects the huge volume seen in down days from the early-February correction.
This proprietary IBD rating covers 13 weeks' worth of price-and-volume action. The Nasdaq, meanwhile, shows a neutral C grade. If the market can keep its uptrend going, both of these Accumulation grades should improve over time.
Going back to Boeing, at least two key technical reasons exist to indicate that the aerospace industry leader is still in the early to middle innings of a grand secular rally. One, during last week's sell-off Boeing did undercut its 10-week moving average but bounced a bit off the week's lows. Volume turned in 36% above average, not quite meeting the 40% threshold that commonly is met by longtime market leaders that finally top out and register a significant decline.
Two, Boeing has already rebounded more than 2% so far this week and lies just 2% below its 10-week line at around 344.19. Watch to see if volume is light, though. A stock that sells off hard after making a long price run-up and recently notching new highs, then makes timid rebounds in lighter turnover, is serving a new sell signal.
A third reason to be bullish about Boeing's long-term prospects? Improving fundamentals. The megacap transport and defense supplier play has posted strong profits for six quarters in a row, and the Street sees first-quarter earnings ramping up 31% to $2.64 a share.
Revenue rose 2% and 9% vs. year-ago levels in the past two quarters, ending a four-quarter streak of declines.
A fourth reason: Institutional sponsorship has been rising over the medium term. Mutual and hedge funds owning shares in Boeing have risen from 2,067 at the end of March 2017 to 2,325 at the end of December.
As seen in IBD Stock Checkup, Boeing holds a decent 80 RS Rating and a poor Accumulation/Distribution Rating of D- on a scale of A (heavy net institutional buying) to E (heavy selling). Obviously, for now, these two technical indicators are in conflict. So investors in Boeing need to pay close attention to the current chart action. Further declines in accelerating volume would point to a higher likelihood that a truly significant decline is in the wings and could lead to the forming of a brand-new base.
Elsewhere, Twitter (TWTR) slid more than 10% to 31.35 in volume that ran 159% above usual levels. Watch for a potential test of the social media network's fast-rising 50-day moving average.
Twitter, which posted a 2% revenue rise in Q4 that ended a three-quarter drought, is still up sharply since clearing a cup-without-handle pattern at 20.98 in late October.
(Please follow Saito-Chung on Twitter at @IBD_DChung for more commentary on breakouts, growth stocks, the economy and financial markets.)
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Here Is The Sell Signal That Boeing Triggered Last Week
