Major indexes ended mixed Wednesday, as transportation stocks outperformed the market. Decent action by megacap techs offered bullish support as Microsoft (MSFT) continues to lead this year and remains in a proper buy zone. Meanwhile, Apple (AAPL), a recent breakout, rallied 2% and got extended from its breakout point on the stock market today.
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The Nasdaq started the day mildly lower. But the composite index switched gears and gained 0.5% by day's end. Therefore, the intraday trading range stayed narrow, which actually could be bullish for investors right now. All but two of the Magnificent Seven companies rallied.
Closing at 17,805 Wednesday, the Nasdaq composite leads the major indexes with a year-to-date gain of more than 18%. That adds to last year's hefty 43.4% advance.
Stock Market Today
The S&P 500, holding a solid gain this year of 14.7% headed into the open, managed to rise 0.2% at the close. As the Tuesday IBD Big Picture column notes, the total number of distribution days by institutional investors remains muted.
The Dow Jones Industrial Average also fell early but switched gears and inched fractionally higher by the close. At least nine of the Dow's 30 components boast a Relative Strength Rating of 85 or higher.
The Russell 2000, however, remained in the laggards' camp. The index finished near the day's low, slipping 0.3% to 2015. It struggled to trim that loss. Looking at IBD's 197 industry groups, air freight led the upside, rising 10% on a price-weighted basis.
Automakers, fiber-optics players, steel firms, specialty alloy companies, movie stocks, non-alcoholic beverage and retail internet groups also paced gains, rising 1% or more.
Overall, stock market volume grew, early data showed.
In other financial markets, crude oil futures held firmly after recently retaking the $80 level. WTI crude lost 21 cents to $80.62 per barrel. Gold futures lost 0.9% to $2,309 per ounce, or 6% below its year-to-date peak of $2,454.
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With Apple, the iPhone juggernaut continued to act well after a recent Apple Worldwide Developers Conference scored new fans in the stock market.
The stock has held up nicely after clearing a trendline entry near 193. That price is several points below a cup base's 199.62 standard buy point. While its 86 Relative Strength Rating is solid, shorter-term RS ratings for the Macbook, iPad and services firm are even grander.
According to MarketSurge, Apple boasts a three-month Relative Strength Rating of 95; the six-month RS Rating is also solid at 90. This means over the past six months, Apple stock has outperformed 90% of all companies in the Investor's Business Daily database.
Meanwhile, Microsoft recently retook a 430.82 buy point after briefly dipping below the 50-day moving average. Shares, trading tightly in recent days, barely remained in the 5% buy zone, which goes from 430.82 up to 452.36.
Wall Street expects the cloud computing and enterprise software giant to continue growing profits steadily, with earnings seen up 20% in fiscal 2024 ending in June to $11.81 a share, and up another 13% in fiscal 2025 to $13.35. In fiscal 2019, the Redmond, Wash., company earned $4.75 a share.
Rivian Revs Higher In Strong Session
Elsewhere, Rivian Automotive (RIVN) soared on a major investment by German automotive titan Volkswagen (VWAGY). Rivian is up more than 40% for the week. It also reclaimed the 10-week moving average. VW shares dipped 1.6% in heavy trading.
As the weekly chart shows, Rivian is forming a deep first-stage base. It is experiencing upside resistance at the 200-day line. Watch to see if the electric-vehicle maker closes the week above this moving average, which rose from 10.95 at the start of this second quarter to 15.19.
Riven posted a tiny decline in its first-quarter loss — $1.24 a share vs. $1.25 a year ago — as sales of its battery-powered sport utility vehicles and pickup trucks vaulted 82% to $1.2 billion vs. $661 million a year earlier. Rivian's Relative Strength Rating of 18 is weak. But the three-month RS Rating of 95 indicates a dramatic turnaround in the stock.
Updated 2:15 p.m. ET
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In the transportation sector, FedEx (FDX) offset the drubbing in passenger carriers after reporting slightly better than expected results. The global delivery giant late Tuesday reported a 10% rise in quarterly profit to $5.41 a share, even though sales gained just 1%.
FedEx stock bolted 15% higher and eclipsed a 291.27 cup-without-handle buy point. It is in the buy zone.
The 5% buy zone for the FedEx breakout extends up to 305.83. The latest cup pattern shows a shallow correction of just 17%. Translation? Large funds were generally reluctant to dump shares over the past few months.
The up/down volume ratio of FedEx, at 0.7, is not savory. In general, prefer companies showing an up/down volume ratio of 1.0 or higher. This ratio tracks volume on up sessions in price vs. volume on down sessions over the past 50 days. However, the weekly chart highlights zero weeks in which FedEx fell for the week in massive volume.
The relative strength line has slumped since October, yet might break a downtrend.
FedEx has actually made no price progress since peaking at 319.90 back in May of 2021. But the silver lining here? FedEx stock has reset its base count to first stage. In general, first and second-stage bases show a higher probability of generating solid gains on the breakout.
Updated 12:24 p.m. ET
Stock Market Today: New Home Sales Down
Investors sold Treasuries with just three trading days remaining in the first half of the year. The yield on the key 10-year government bond rose seven basis points to as high as 4.31%.
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Homebuilders did not move much, despite data showing shrinking new home sales in the U.S. In May, new homes sold at an annualized rate of 619,000, sharply below the Econoday consensus forecast of 650,000.
The figure also dropped sharply from an upwardly revised April figure of 698,000 new homes sold.
Within IBD's residential building group, thinly traded NVR (NVR) actually rose modestly. The Virginia-based single family home and townhome builder remains a true leader in the stock market today.
Updated 10:41 a.m. ET
A Strong, Yet Mixed, Sector Today
Elsewhere, transport stocks showed much higher volatility.
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On the downside, Southwest Airlines (LUV) reversed lower for the week on a dismal second-half industry forecast. Southwest stock holds a weak 32 Relative Strength Rating.
The Dow Jones transportation average led in the stock market today, extending gains to almost 1.8%. Further, the sector index has been jumpy and yet it's retaken the long-term 200-day moving average.
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Stock Market Today: Chip Stocks Rebound
Meanwhile, market leader Arm (ARM) rallied sharply. An initial 3% gain by the key player in chip design expertise shoved shares above a standard 164 entry point in a four-month base.
Arm, based in the UK, recently joined the IBD Leaderboard watchlist. Arm holds a 99 Composite Rating, the best possible, on a scale of 1 to 99.
From a broader view, iShares Semiconductor (SOXX) exchange traded fund initially outperformed a touch in the stock market today, up 0.3%. But the gain faded to a nearly 0.8% drop. The ETF got pounded in recent days but showed fortitude at its rising 21-day exponential moving average, an important technical level on the chart.
Industry mate Broadcom (AVGO) is trying to halt a steep five-session sell-off. The global chip design giant rose more than 1% but shaved that gain. Trading as high as 1,618, Broadcom stock remains above a recent buy point from a shallow base at 1,438.17.
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Please follow David Chung on Twitter: @saitochung and @IBD_DChung
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