Transportation-related companies helped pace a broad rebound in stocks Monday after the key indexes fell mildly last week. The Dow transports jumped more than 1.2% on Monday, beating a 0.7% advance by the S&P 500 and a 0.5% rise by the Nasdaq composite.
XWeekend comments from U.S. Treasury Secretary Steven Mnuchin indicating that the U.S. and China will work to settle differences over bilateral trade issues gave stocks the initial spark they needed. The Nasdaq, which eased nearly 0.7% last week, gained as much as 1.1% intraday before cooling off.
Meanwhile, the continued positive breadth of the market could be witnessed by the fact that three companies in three separate sectors continued to build a case for a potential breakout: Google owner Alphabet (GOOGL), farm machinery giant Deere (DE) and HR management software expert Workday (WDAY).
The Dow Jones industrial average, meanwhile, held most of the day's gains as it closed more than 1% higher. At least eight of the Dow industrials' 30 components rallied 1 point or more, including manufacturing heavyweights Caterpillar (CAT) and United Technologies (UTX).
Volume rose on the Nasdaq vs. Friday, which saw the expiration of monthly stock and index options. But turnover declined on the NYSE, based on early data.
Cat's Next Move?
Caterpillar is building the right side of a new shallow base that began with a 173.24 peak notched in mid-January.
The stock bounced nicely off its 200-day moving average on May 3, then retook its key medium-term 50-day moving average nearly two weeks ago. For now, the correct entry is 173.34, a dime above the base's left side high.
Also within the Dow, struggling General Electric (GE) staged its eighth gain in 10 sessions to 15.25 on news that the blue-chip firm will merge its locomotive operations with Wabtec (WAB).
GE has been in a sharp downtrend since December 2016. The stock has recently rebounded back above the 50-day line but still lies 48% beneath its 52-week high of 29.47.
In A Trading Range
Alphabet has been locked in a four-month trading range of 1,000 to 1,200. The stock needs to put more work in developing the right side of a new base in order to set up a potential breakout.
The Mountain View, Calif.-based megacap tech was the subject of a "60 Minutes" CBS TV show on Sunday that interviewed some industry observers and players charging that the Google search engine engages in anticompetitive behavior through its online search results.
The company has already been fined $2.7 billion by the European Union. That's less than 9% of the $31.15 billion in Alphabet's top line in the second quarter.
Q2 earnings are seen rising just 9% to $9.69 a share, which would be the smallest year-over-year increase since a 7% EPS gain in the fourth quarter of 2016. Alphabet grew earnings per share by 28%, 27%, 32%, 28% and 28% vs. year-ago levels in the past five quarters.
Deere Keeps Moving
Deere, meanwhile, gained nearly 2% to 158.34 in brisk trading Monday, extending a rebound from a 131.26 year-to-date low to more than 20%. The stock is still in the early stages of carving the right side of a new base.
Last week, the tractor and lawn-mower maker reported excellent results for the second quarter ended in April (EPS up 45%, revenue up 29% to $10.7 billion).
Strength In Business Software
Workday has sculpted a downward-slanting handle on its nine-week double-bottom-style base. The correct buy point is 138.75.
The handle passes the midpoint test.
While the Street sees April first-quarter earnings sinking 10% to 26 cents a share, keep in mind that in the year-ago quarter, earnings soared 383% to 29 cents.
Workday's top line has seen vigorous growth. Revenue has jumped 39%, 32%, 35%, 36%, 38%, 41%, 34% and 33% vs. year-ago levels in the past eight quarters.
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