Key market index funds finished mixed Wednesday as IBM (IBM) weighed on the Dow Jones industrials despite beating Q1 earnings and sales forecasts.
SPDR Dow Jones Industrial Average (DIA) dipped 0.2%. PowerShares QQQ Trust (QQQ) climbed 0.2%, and SPDR S&P 500 (SPY) added 0.1% in the stock market today. Foreign markets outperformed with iShares MSCI Emerging Markets (EEM) up 0.9% and iShares MSCI EAFE (EFA) advancing 0.5%.
IBM gapped down and plunged more than 7%. After the close Tuesday, Big Blue reported Q1 results that topped views on both the top and bottom lines. But its full-year profit forecast was a bit light. Most other big-cap techs on the Dow were slightly higher. Intel (INTC) cleared a 53.88 flat-base buy point intraday before paring its gains to close below the entry.
Apple (AAPL) eased 0.2% but remains well above its 50-day line and close to a 183.60 flat-base entry.
Energy, metals miners and homebuilders led the upside among sector funds. SPDR S&P Oil & Gas Exploration & Production (XOP) surged 3.1%, extending its win streak to four and getting close to a 40.29 buy point. West Texas intermediate crude prices leapt 3.4% to $68.76 a barrel.
Consumer staples, semiconductor and banks lagged. Despite Intel’s gain, VanEck Vectors Semiconductor (SMH) fell 1.1%, back below its 50-day moving average. ASML Holding (ASML) shed 3% after it beat Q1 consensus forecasts but its profit margin for the current quarter disappointed.
Bitcoin gained 3% to $8,117, according to CoinDesk, after opening below the $8K level. Bitcoin Investment Trust (GBTC) rose 6.5%. It remains below its 50-day line, as it has been for most of the past three months.
Top Techs Setting Up
Apple, Microsoft (MSFT) and other surging big-cap tech stocks are setting the stage for a potential buy opportunity as the market continues to rebound.
Technology Select Sector SPDR Fund (XLK) gapped up and added some space above its 5o-day moving average Tuesday, shaping the right side of a shallow base. The buy point for now is 71.44, or 10 cents above the left-side high.
The $20.5 billion exchange traded fund, which provides exposure to technology and telecom stocks in the S&P 500 index, marked its 19th anniversary in December. It was last featured in this ETF column on March 2, as shares tested the 50-day moving average.
Software represented the biggest sector weigh as of April 16 at nearly 22% of assets. Internet software and services came in at 18%, technology hardware storage and peripherals 17%, and IT services 16%. Semiconductor stocks weighed in at about 15%, while smaller positions in telecom services, gear and electronic equipment made up the rest.
Its top five holdings — Apple, Microsoft, Facebook (FB) and Alphabet (GOOGL) — accounted for roughly 43% of the 72-stock portfolio. Apple is building the right side of a flat base and getting close to a 183.60 buy point. The iPhone maker is reportedly planning a news subscription service based on its recent acquisition of digital magazine app Texture.
Microsoft is also forming a flat base. The buy point is 97.34. Alphabet leapt more than 3% Tuesday to regain its 50-day line, while Facebook continues to recover from its late-March lows and is still 2% below its 50-day line.
XLK returned 4.8% year-to-date through Monday, outperforming the S&P 500’s 0.6% advance. Its average annual returns are also beating the S&P 500 over the past three, five, 10 and 15 years. The ETF carries a 0.13% expense ratio.
Tuesday’s pick, SPDR S&P Aerospace & Defense (XAR), broke out past a 90.27 flat-base entry. It remains in a potential buy zone.
