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Nasdaq Jumps 2%; Adobe, Monolithic Power Break Out

Adobe Systems rose 3% and cleared a 98.10 buy point on Tuesday, but volume on the breakout was weak. (Adobe Systems)

Stocks jumped Tuesday, with the Nasdaq posting its biggest gain in nearly three months, after a big increase in existing-home sales suggested that the economy may be able to weather higher interest rates.

The Nasdaq rallied 2%, the S&P 500 rose 1.4% and the Dow Jones industrial average added 1.2%. All three indexes climbed back above their converging 200-day and 50-day moving averages, a bullish indicator for the health of the overall market. In another good sign, volume rose across the board compared to Monday, according to preliminary data.

Machinery, auto parts and consumer-related stocks paced the gains in the stock market today, while miners underperformed as gold prices dropped.

Adobe Systems (ADBE) rose 3% and cleared a 98.10 buy point. Its relative strength line is hitting new highs, which is a bullish indicator, but volume on the breakout was weak.

How does Adobe Systems stack up against its rivals in the desktop software industry? Find out at IBD's Stock Checkup.

Monolithic Power Systems (MPWR) rose 2%, climbing above a 66.34 buy point of a cup-with-handle base in heavy volume.

Homebuilders fared well after sales of existing homes soared 16% in April to a seasonally adjusted annual rate of 619,000 units, the highest since January 2008.

Pulte Group (PHM) rose 5%, retaking its 50-day and 200-day moving averages. Lennar (LEN) rose nearly 4% and D.R. Horton (DHI) added more than 4%, retaking its 50-day moving average as it works on a cup-with handle base with a 32.61 buy point.

All but one of the IBD 50 stocks rose, led by NetEase (NTES), which jumped 6%. The Chinese online gaming stock is climbing the right side of a cup-type base with a possible 186.55 buy point.

Blue Buffalo Pet Products (BUFF) was the only decliner, ending down a fraction after erasing an early gain of about 1%. The pet food maker is having trouble clearing a 26.08 cup-with-handle buy point.