Wall Street showed choppy action in stocks today, but in late-afternoon trading the Nasdaq composite took out its morning highs and rebounded further, up nearly 0.8% at around 2:30 p.m. ET. The leading index is also trying to stay on the north side of its critical 50-day moving average after a 1.5% sell-off the prior session.
The small-cap S&P 600 lagged, but is now up 0.2%.
A final revision of U.S. GDP growth to 2% in the first quarter did not inspire energetic buying by fund managers. The increase missed the Econoday consensus forecast of up 2.2%. But a few megacap techs, such as Apple (AAPL) and Microsoft (MSFT), showed positive support at the key 50-day moving average.
Apple, at 185.08, is hovering above its own 50-day moving average and keeping thin gains after a May 4 breakout past a 179.04 entry in a double bottom. (Please read this earlier Stock Market Today column for three key reasons why Apple investors can keep holding the tech leader.)
A Short-Term Ceiling At $400?
Netflix (NFLX), meanwhile, edged just slightly lower after eclipsing the 400 price level last week. The online video streaming titan remains on IBD Leaderboard as a full-position stock idea as its long-term uptrend continues.
The Los Gatos, Calif., firm is now the eighth-largest firm within the Nasdaq composite in terms of market value. At $169 billion, Netflix makes up 1.3% of the index. (See the top 30 companies within the Nasdaq by going to the top of its daily chart in the General Market Indicators link at the bottom of The Big Picture column, which runs daily.)
The S&P 500 nearly matched the Nasdaq composite’s advance, up almost 0.4%. The Dow Jones industrial average rose nearly 0.2%. Goldman Sachs (GS) led the Dow industrials and gained more than 3 points to 223.69 in slightly above average trade.
Despite the mild general rebound, the market internals are not so bullish. On the Nasdaq, falling stocks exceeded advancers by nearly 200 issues. NYSE losers led winners by a 100-stock margin.
A Yellow Traffic Signal For The Market
The current outlook for the stock market is “uptrend under pressure,” downgraded on Monday from “confirmed uptrend.”
That day, institutions sold shares fiercely amid greater concern over tariffs by the U.S. and China on an increasing range of goods. While volume did not increase vs. the prior day, the change was skewed by late-hour transactions related to a rebalancing of Russell equity indexes. Turnover was heavy on Monday, and the Nasdaq composite already had five distribution days on its books.
On Thursday, restaurant, wholesale drug supply and drugstore chain stocks led the downside. Heavy construction, cement, home furnishings retail and lodging-related shares fell 1.4% or more.
Game On
But the market also saw solid buying in gaming software firms. Revenue rose 6% to $5.15 billion in the fiscal year ended in March, while earnings climbed 8%. While that’s mild growth, the Street expects EA’s earnings to accelerate 19% higher to $5.02 in fiscal 2019.
Electronic Arts (EA) gained nearly 2% to 140.22 in light trade. The stock is vying to halt a five-day losing streak. It has a solid cushion above the rising 50-day moving average. Plus, shares still hold a healthy gain of 6.8% from a 131.23 buy point in a seven-week flat base.
EA is well-known for its professional-sports video games.
The stock has rallied more than 65% since climbing out of a four-month saucer with handle in February 2017.
Rival Activision Blizzard (ATVI), an expert in fantasy and mobile video games, rallied more than 2% to 75.83 in quiet volume. More importantly, it’s crafting a new three month cup with handle. This pattern is one of the most important for growth investors to search during a bull run.
The handle’s high is 79.25, rendering a buy point at 79.35.
On a quarter-to-quarter basis, Activision’s top and bottom lines can show lumpiness. However, in 2017, Activision notched earnings of $2.69 a share, nearly triple the 94 cents it earned in 2014.
Revenue has ballooned 53% over that three-year time frame to a record $7.02 billion last year.
