Wall Street moved higher today despite a reversal lower by Apple (AAPL), now famous for being an important Warren Buffett stock play. Retailing, transport, energy and select consumer-oriented companies paced the upside in stocks today.
The Nasdaq composite, still the leading market index for U.S. equities this year, inched less than 0.1% higher as chip, generic drug, biotech and telecom stocks struggled. The S&P 500 and Dow Jones industrial average did a bit better, rising 0.2% to 0.4% each. The small-cap S&P 600 rallied 0.4% and made new all-time highs.
Volume fell moderately on both main exchanges, according to preliminary data.
Within the 30-stock Dow Jones industrial average, Boeing (BA) headed a group of seven components that rose 1 point or more.
Boeing showed bullish action Monday as the aerospace giant hoisted itself back above the key 50-day moving average. Shares rose 4.35 points, or 1.3%, to 350.75 in light turnover. For now, a potential flat base may be forming after Boeing’s latest peak of 374.48 set on June 7.
The Right Time To Buy The Warren Buffett Stock
Fellow Dow Jones industrials component Apple fell 1% to 215.46, but not before making a new all-time high of 219.18. At that price, the iPhone and MacBook marketer increased a profit from a May 4 breakout point at 179.04 to more than 22%.
Apple, a Leaderboard stock, cleared that prime buy point on May 4 as shares thrust at least 10 cents past the middle peak of 178.94 in a seven-week double-bottom base. Apple didn’t move up much after the breakout, but instead ended up creating a new flat base atop that double bottom. Such action produced a base on base and a buy point of 194.30.
Volume in Apple on Monday rose 19% above its 50-day average turnover of 24.64 million shares each day.
Legendary value investor Warren Buffett has built a substantial position in the tech leader. Meanwhile, Apple so far appears to be following through on its long-range plan to buy back $100 billion of its own shares.
Despite Monday’s reversal, notice how the megacap tech maintains a bullish cushion above its rising 50-day moving average. That 50-day moving average, painted in red in all IBD daily charts, shows the general price trend of a stock over the past 50 trading sessions.
Apple, which is riding the momentum of seven straight quarters of profit growth, is expected to keep growing the bottom line at an impressive clip. The Street has recently bumped up its fiscal 2018 and fiscal 2019 earnings estimates to a consensus $11.78 a share (up 28%) and $13.56 (up 15%), respectively.
Apple Ratings Still Point To Leadership
According to Stock Checkup, Apple’s 99 Composite Rating on a scale of 1 to 99 continues to top the Telecom-Consumer Products industry group, which also includes Motorola (MOT), Ooma (OOMA), and Tessco Technologies (TESS).
On Monday, the Cupertino, Calif., company reportedly pulled lottery apps from its app store in China, a pivotal market.
Also in Leaderboard, Paycom Software (PAYC) added 1.2% for a third up day in a row and reached a new all-time high of 142.04. At that price, the expert in “human capital management” padded its gain from a 115.64 buy point in a good double bottom to nearly 23%.
A good rule for selling growth stocks on the upside is to take at least partial profits when your stock has risen 20% to 25% past a proper buy point. If you have a supersized profit cushion, you can decide to hold longer and wait for a true defense-style sell rule to emerge.
Consumer Stocks Jam
Nike (NKE) gapped up on positive comments from at least two Wall Street analysts. The athleisure giant rose 3% to 82.18 and climbed back above a flat base with an 81.10 proper buy point. Volume came in decently above average amid a generally sluggish day on Wall Street turnover-wise.
Nike is beginning to show a similar kind of earnings turnaround that Apple pulled off in 2016.
The Beaverton, Ore., sports shoe, equipment and apparel firm logged a 15% jump in earnings to 69 cents a share in the May-ended fiscal fourth quarter. That marked a second quarter in a row of acceleration — from an 8% drop in the November fiscal second quarter and flat earnings in Q3 ended in February.
The Street sees Nike’s earnings rising 9% to 62 cents a share in the current fiscal first quarter that ends in August, then re-accelerating 15% to 53 cents in fiscal Q2 on revenue gains of 9% and 8%, respectively.
Airlines thrived despite a jump in crude oil prices. Thinly traded SkyWest (SKYW) jumped more than 1.2% to 61.92 and hit a new closing high.
The St. George, Utah-based regional airline has cleared a long saucer-style base with a 60.75 buy point. It initially topped the entry with a July 27 breakout. SkyWest is still in the 5% proper buy zone.
A Hairpin Curve By Tesla Stock
Tesla (TSLA) fell nearly 6% but share prices made a hairpin curve up wiped away all of those losses. The automaker rose 2.90, or nearly 1%. But at 308.40, the former stock market leader still sits nearly 22% below an all-time peak of 389.61.
JPMorgan analysts slashed their price target on the electric vehicle maker to $195 from $303. Among the 21 Wall Street firms tracked by Yahoo Finance, that’s currently the lowest in a range of price targets that go up to $500. The average price target: $329.24.
Other Financial Markets
Institutions showed an appetite for long-dated U.S. Treasuries amid continued confidence that the general inflation picture remains tame. The yield on the benchmark 10-year note fell 5 basis points to 2.82%, an August low.
The yield on the 2-year Treasury note dropped 1 basis point to 2.60%. The spread between the 2- and 10-year bonds is now at 22 basis points, down from 33 basis points on Aug. 1.
U.S. crude oil futures gained 0.8% to $66.44 a barrel.
Later this week, Wall Street traders will focus on the status of trade negotiations between the U.S. and China, as well as a statement slated for Friday by Federal Reserve chief Jerome Powell at the end of a meeting of central bank officials from around the globe in Jackson Hole, Wyo.
