Dow Jones Rises 3,100 Points From Dec. 26 Low; 6 Top Stocks Break Out

The Dow Jones industrial average rose 0.8% and joined a broad and sharp rally in stocks today after President Donald Trump agreed to halt a one-month partial government shutdown. At Friday’s session high of 24,860, the 30-stock blue chip index has now bungee-jumped 3,148 points, or more than 14%, from its Dec. 26 intraday low.

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Meanwhile, BioTelemetry (BEAT), Domino’s Pizza (DPZ), Tencent Music Entertainment (TME), PayPal (PYPL), Xilinx (XLNX) and Cornerstone OnDemand (CSOD) showed the type of weekly price gains shown by true market leaders.

Domino’s Pizza, Tencent Music, PayPal and Xilinx are current members of IBD Leaderboard. Since BioTelemetry ranks within the top 10 inside the IBD 50, IBD’s senior market writers and editors also annotate this stock’s daily and weekly charts in Leaderboard in real time to note correct buy points, timely sell signals and important aspects of price-and-volume action.

The Importance Of A Stock Market Follow-Through

The Nasdaq composite led Friday’s rally with a 1.3% gain. It also marked a fourth up week in a row, rising fractionally for the week. For the week, the S&P 500 lost about 0.3% despite Friday’s 0.8% lift. The S&P SmallCap 600 snapped a four-week win streak, but gave back less than 0.2% for the week.

Good action by highly rated stocks such as the six mentioned above tends to take place after a follow-through occurs in the stock market. On Jan. 4, the S&P 500 bolted sharply higher in heavier turnover vs. the prior session. It marked Day 7 in a new rally attempt following the bear market-sized drop in October to December of last year.

IBD research of more than 22 bull and bear market cycles finds that every major stock market bottom going back to 1900 featured a follow-through rally.

The daily Big Picture column monitors the price-and-volume action of both major equity indexes and attention-worthy growth stocks to determine these timely junctures in the stock market.

For more on the latest Jan. 4 follow-through, please read this Big Picture column.

Will Xilinx Lead Top Chip Stocks In 2019?

Xilinx, the specialist in programmable chips for data center and communications markets, blasted more than 17% higher for the week, leaving a 95.28 buy point in a cup without handle in the dust.

The iShares PHLX Semiconductor (SOXX) ETF gained 4.2% for the week. It’s now testing upside resistance near the 40-week moving average.

Cornerstone rose more than 2% on Friday and rolled past a 55.54 proper entry in a base that features two major sell-offs typically seen in a good double-bottom base.

According to IBD Stock Checkup, Cornerstone gets a wonderful 98 Composite Rating on a scale of 1 (awful) to 99 (awesome). The mediocre 72 Earnings Per Share Rating is offset by a 94 Relative Strength Rating and an A for SMR (Sales + Margins + Return on equity).

Wall Street sees fourth-quarter profit rising a healthy 26% to 24 cents a share. The Santa Monica, Calif.-based human capital management software firm increased profits by 75%, 500% and 92% vs. year-ago levels in the prior three quarters. Such big quarterly earnings gains also offset a mild 72 EPS Rating, largely brought down by the company’s young history of profits. It began turning a profit in 2016 after years of net losses.

Health Care Leaders In The Stock Market

Inside the IBD 50, BioTelemetry rose as much as 4.5% and briefly cleared a 70.58 proper buy point in an eight-week cup with handle base.

In the cup with handle, expect the decline from the cup’s left-side peak to the bottom of the pattern to fall within the 12% to 33% range. In BioTelemetry’s case, the correction within the cup base nearly hit 32%. So it falls within normal range. The stock began forming a narrow downward-sloping handle on Jan. 17. This handle is visible, for now, only on a daily chart.

The Street expects the cardiac care expert to post a 34% jump in fourth-quarter earnings to 43 cents a share. Analysts also forecast an 87% leap in full-year profit to $ 1.81. But the consensus view also shows no increase in 2019 earnings per share thus far. Investors should prefer to see companies that have a reasonable expectation of double-digit EPS gains in the current fiscal year.

Through Thursday’s close, BioTelemetry’s Medical-Services industry group ranked 53rd among 197 IBD industry groups for six-month relative performance. That’s up from 71st three weeks ago but down from 49th six weeks earlier.

These Top Stocks Recently Join Leaderboard

Several new stocks, meanwhile, joined Leaderboard as they scored fresh breakouts. They include Domino’s Pizza, up 6% for the week and rising for a third week in a row. Tencent Music Entertainment had a very good week, rising more than 12%. It’s now past the 5% buy zone following a move past a 14.85 entry point in a narrow IPO base.

Earnings News Coming Up

Next week, these high-growth companies are slated to report quarterly results:

Verizon Communications (VC), Tuesday: analysts see earnings in the telecom giant and 5G wireless developer rising 27% to $ 1.09 a share in the fourth quarter.

McDonald’s (MCD), Wednesday: The Street sees Q4 earnings growing 11% to $ 1.89 a share despite a 3% slip in sales to $ 5.17 billion.

Visa (V), Wednesday: The credit and debit card transactions giant may see earnings rise 16% to $ 1.25 in fiscal Q1. The stock is building a long base that shows elements of a double bottom.

Abiomed (ABMD), Thursday: The heart pump innovator is seen boosting profits 224%. The big market winner is also still working on a big, deep base.

See the entire list of companies reporting earnings in the IBD Earnings Calendar. For more on how to use call options to reduce risk during earnings season, please read the latest Earnings Preview feature.

In Other Financial Markets

Investors dumped long-dated U.S. government bonds. The yield on the benchmark Treasury 10-year note jumped 3 basis points to 2.75%. Crude oil rallied 1%.

Gold and silver both advanced amid U.S. dollar weakness against the euro.

Follow David Saito-Chung on Twitter at @IBD_DChung for more on growth stocks and financial markets.

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