Nasdaq Beats Dow Jones In Broad Gain; These 5 Leaders Eye A New Breakout
The Nasdaq composite, boosted by another day of strength in the internet, social media, software and telecom fields, marked its biggest single session gain in six sessions with a 1% lift. That gain was considerably less than an intraday advance of more than 2%.
Yet it still beat gains of around 0.5% to 0.6% for both the Dow Jones industrial average and the S&P 500. The Russell 2000 gained roughly 1.1%.
Ciena (CIEN), slated to report fiscal Q4 results Thursday morning ahead of the market open, helped drive the gain in the telecom sector, even as fellow Leaderboard member Verizon Communications (VZ) fell more than 2.5% on a Morgan Stanley downgrade. Verizon remains above its pivotal and rising 50-day moving average.
The Street expects Ciena to post earnings of 48 cents a share on revenue of $ 862.4 million.
Meanwhile, Trade Desk (TTD), Atlassian (TEAM), Ring Central (RNG), HMS Holdings (HMSY) and Amedisys (AMED) continued to show high relative strength, as exhibited by their rising RS lines.
Trade Desk Chart Analysis
Trade Desk, up about 4%, is rising closer to a potential breakout from a nearly 11-week cup with handle. The handle’s high of 149 means the proper entry is 149.10 (or a dime above the highest price within the handle).
Keep in mind that the omnichannel ad buying platform has made a strong run since it bolted past a 67.40 buy point with a breakaway gap on May 11. Shares have since risen as much as 140% before Trade Desk began forming its current new base.
Atlassian, an expert in team collaboration software and other productivity tools, is building a cup with handle of its own. The correct buy point is 89.92. RingCentral is trying to clear an 86.84 buy point in a three-month double bottom. But at 86.53, the stock could afford to keep working on the right side of its base. It still trades 11% below the base’s left-side high of 98.15.
Read more about HMS and Amedisys and their chart action in today’s Stock Spotlight column.
These Retailing Stocks Struggle
On the downside, Dave & Buster’s (PLAY) dived nearly 8% on a disappointing decrease in quarterly same-store sales. The stock sank back below its long-term 200-day moving average.
Under Armour (UAA) gapped down bearishly, falling more than 10% to 19.81 and clipping its own 200-day line. The athletic apparel giant gave a dour outlook on holiday-quarter sales.
The Baltimore-based firm grew the top line by 5%, 6%, 8% and 2% vs. year-ago levels in the past four quarters. In contrast, arch rival Nike (NKE) has shown a mild uptick in its sales growth rate, accelerating the top line by 5%, 7%, 13% and 10% over the same time frame.
Nike is also outperforming Under Armour in the sense that the stock trades just 13% below a 52-week peak of 86.04. A market leader tends to rebound to within 5% to 15% below a 52-week or all-time high, then completes a base that could possibly lead to a strong breakout and a genuine entry point for individual investors.
UA now trades 20% below its peak of 24.96. Watch to see if the stock can rebound back above the long-term 200-day moving average. The stock’s Relative Price Strength Rating continues to be good at 95 on a scale of 1 to 99, according to Stock Checkup. However, erratic earnings in the past several quarters following a deep dive in annual profits last year punctured the stock’s EPS Rating to a lowly 25. The overall Composite Rating is a smelly 49.
Nike hosts a much better Composite Rating of 93, according to its IBD Stock Checkup.
Yeti Stock Freezes
Recent new IPO Yeti (YETI), maker of high-end portable coolers for camping and fishing, slumped for a sixth straight session. The stock slid more than 6% to 13.90, an all-time low. The Austin-based company went public on the NYSE on Oct. 25 at $ 18 a share.
The Street expects Yeti to grow earnings 262% to 29 cents a share in the fourth quarter, following EPS increases of 367%, 367% and 85%. Keep in mind that those huge increases got the benefit of easy year-over-year comparisons. Due to inventory and supply chain challenges, Yeti saw profits plummet from the first quarter of 2017 to Q4 that year.
In Other Financial Markets:
U.S. crude oil futures reversed lower, falling more than 1% to $ 51.11 a barrel. At one point, oil hit as high as $ 52.88. Crude oil recently got a boost from pledges by the OPEC+ group to cut production next year. Traders cited a smaller than thought cut in weekly U.S. oil inventories. The EIA reported a weekly drop of 1.2 million barrels for the week ended Dec. 7, according to Econoday. That followed a 7.3 million barrel plunge in the prior week.
Gold rose 0.3% and crossed the $ 1,250 per ounce level.
The yield on the benchmark U.S. Treasury 10-year bond continued to climb, rising 2 basis points to 2.91%. It’s still off the month-to-date peak of 2.98%.
Follow Chung on Twitter at @IBD_DChung for more on growth stocks and financial markets.
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