Stocks came off lows in afternoon trading Monday, although some industry groups were under added pressure.
Losses were well-contained, with the main indexes trading inside Friday’s price ranges and declines at less than 0.3%.
The Nasdaq composite was off 0.1%, the S&P 500 0.2% and Dow Jones industrial average 0.3%. The small-cap Russell 2000, which has been lagging the major indexes for about a week, fell 0.2%.
Volume was higher on the NYSE and lower on the Nasdaq compared with the same time Friday. Although the key indexes pared losses, breadth was poor. Losers led winners by more than 3-to-1 on the NYSE and by 3-to-2 on the Nasdaq.
Energy, chip equipment, homebuilding and solar industry groups were some of the weakest in today’s market.
Signs of stress are growing in the homebuilding group. LGI Homes (LGIH), William Lyon Homes (WLH), Toll Bros. (TOL) and D.R. Horton (DHI) have moved below their 50-day moving averages for the first time since September, when those stocks were basing. A few other builders had already slid below the 50-day line.
Myriad Genetics (MYGN) gapped down in heavy trading after Goldman Sachs initiated the stock with a sell rating today. The genetic testing company erased all gains from a breakout past a 37.40 buy point, which results in a sell signal.
But Gilead Sciences (GILD) soared above the 86.37 buy point of a cup without handle. Volume was more than triple its usual pace. But the relative strength line is well short of a new high, which may hamper the stock’s move to new highs.
The biotech is following up Friday’s 5.3% surge, which came after Jefferies upgraded Gilead to buy from hold and raised its price target to 95 from 87.
Fibria (FBR) broke out of a cup without handle, clearing the 17.31 buy point in heavy volume. Reports quoted by Reuters say Netherlands-based Paper Excellence is considering acquiring the Brazil-based forestry company. The relative strength line is trending higher but has not made a new high.
Universal Display (OLED) fell 6% and continues to struggle below the 50-day moving average. The maker of organic light-emitting diode technology has been weakening on reports of flagging demand for Apple’s iPhone X, which uses an OLED display. On Monday, Japan’s Nikkei reported that lackluster sales of the iPhone X may delay Apple’s plans to introduce OLED screens in other models.
Dow component Caterpillar (CAT) was down nearly 3% in heavy trading. The stock had been rallying from its Nov. 30 breakout past a tightly wound flat base at 140.54 and had climbed more than 20% until it started to stall the past couple of weeks.
Despite strong earnings Thursday, the stock has come under selling since then. Caterpillar’s behavior shows the importance of taking profits after a stock is up 20% or 25% from its entry.
