Shares went into a mixed open Thursday, driven by disappointing weekly unemployment benefit data after two sessions of quietly constructive trading. Tech stocks grabbed the early advantage, with Square and PayPal plotting out early leads. Apple climbed the Dow Jones today, aiming to extend its rally to a sixth day, despite reports of chip shortage problems.
The Nasdaq Composite jumped 0.9%, while the S&P 500 was up 0.2% to hit a new high at the opening of the trade. Dow’s industrial companies lost 85 points, down 0.2%, like Chevron (CVX) led the stock market decline today.
Free market (MELI) and Autodesk (ADSK) led the Nasdaq’s early advance. Autodesk jumped more than 3% and also led the S&P 500. Stocks climb to a buy point of 316.41 in double bottom. Market leader in aerospace Textron (TXT) jumped 2.5% and caught up with a buy point after upgrading to buy from Goldman Sachs. The breakout, with a buy point of 57.14 in a three-week pattern, is in the buy range through 60.
Square (SQ) was an early leader among the IBD 50 and Leaderboard stocks, up 2.8%. The maker of point-of-sale systems bounced back above the 10-week moving average this week, rising 6.8% through Wednesday. The six-day rally has put it in buying range for aggressive investors as it scales the right side of a seven-week base pattern.
PayPal is also on a six-day advance, testing the resistance at the bottom of its 50-day / 10-week line. Shares were up 2% at the opening of a trade. If that move stays through the opening bubble, the PayPal stock would open above the 50-day line for the first time since March 3. PayPal is also on both the IBD 50 and Leaderboard lists.
Semiconductor stocks were strong in early action, driving the VanEck Vectors Semiconductor ETF (SMH) up 0.9%. The ETF finished 2% below a buy point of 258.69 in an eight-week cup base on Wednesday.
Microsoft, Apple today takes off on Dow Jones
The techs have once again set the early pace on the Dow Jones today. Salesforce.com (CRM) led with an advance of 2%. Intel (INTC), Apple (AAPL) and Leaderboard Shares Microsoft (MSFT) were right behind.
Apple’s stock recovered even when Nikkei Asia reported that Apple was experiencing production delays on its MacBooks and iPads due to the ongoing global chip shortage.
The result is a drop in orders for some devices in the second half of the year. The delays indicate a possible worsening chip shortage, Nikkei reported, and could hit smaller tech players even harder.
Apple was up 1.5% early Thursday after it outpaced the market and narrowly exceeded its 50-day moving average on Wednesday. Apple shares are up five consecutive sessions, up 10% from its low on March 8.
Technically, it is in a buying zone for aggressive investors as the stock appears to be moving up on the right side of a three-month basic effort.
Unemployment Claims, Powell Debate, Vital Signs
The number of initial applications for unemployment assistance rose to 744,000 in the week ending April 3, the Labor Ministry reported. That was higher than last week’s 728,000 grand totals, implying disappointing expectations for a second consecutive drop to 680,000 claims.
The markets will also be aligned with the participation of Federal Reserve Chairman Jerome Powell in a virtual debate by the International Monetary Fund on the global economy starting at 12 noon ET.
Wednesday’s publication of the minutes of the Fed’s meeting on March 17 showed a steadfast stance. The record indicated that it would take “some time” for them to start phasing out aggressive monetary measures to support the economy, and to communicate any possible movement well in advance – just the kind of predictability investors are looking for.
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World market trading was mixed, with European markets strengthening in afternoon trading. Crude oil prices held their recent range, with the West Texas Intermediate falling slightly to stay just below $ 60 a barrel. Bonds were stable, with the 10-year yield unchanged at 1.65%. Bitcoin reversed early losses, gaining nearly 0.2% and climbing above USD 57,000 again.
Tracking from the Nasdaq’s Cup Base
After a few days of level trading, the Dow and S&P 500 are hovering just below record highs, while the Nasdaq adds another stone to the symmetrical consolidation that began in mid-February. The tight action from the past two sessions has been positive, according to Wednesday’s Big Picture, as it shows the market is refusing to return any of its March advance.
A look at the Invesco QQQ Trust (QQQ) shows that the Nasdaq Composite has shaped what IBD MarketSmith analysis identifies as an eight-week cup base. The buying point for the ETF is 338.18. The fund finished less than 2% on that entry Wednesday. The symmetry of the base is a positive sign. In addition, the last two days can be the start of a handle forming on the cartridge. In this regard, a few more days of flat action could be positive.
Aggressive investors can follow the same basic pattern that forms on the leveraged ProShares UltraPro QQQ (TQQQ) chart. The Invesco QQQ gained 1.1%, the ProShares UltraPro QQQ rose 3.2% in Thursday’s premarket trading.
Dow Jones Today: A Dozen Blue Chip Buy Points
The Dow Jones opens today chartered with an unusual number of stocks in bases and close to buying points. More than a third of Dow’s 30 shares are currently in buy ranges or just below buy points.
Among those, Boeing (BA) is back in a buy range above a buy point of 244.18 in a 12 week cup base. Intel is in a buying range of over 63.64 in a cup with handle.
Microsoft stock is now up in four of the past five sessions, finishing not quite 2% above a 246.23 flat-base buy point Wednesday. The buying range extends to 258.54. Both Boeing and Microsoft are stocks listed on the IBD Leaderboard.
Goldman Sachs (GS) is in the third week of tight trading as it tests its 10-week moving average. The pullback from the March highs and the support at the stock’s 50-day / 10-week moving average puts it in front of a potential buying opportunity if it bounces back from 10-week support.
The tight weekly closings usually indicate that institutional investors are building shares. This could potentially amplify support rebound.
Walt Disney (DIS) is technically in a buying range. But it is also set up for a possible rebound of support, and can also build a basic pattern. Nike (NKE) is seeking to reclaim the support, offering a potential early entry point for aggressive investors in building their base.
UnitedHealth Group (UNH) is back below a buy point of 367.59 as it tests support on its 21-day exponential moving average.
Find Alan R. Elliott on Twitter @IBD_Aelliott
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