Futures for the S&P 500 index, Nasdaq 100 and Dow industrials rose slightly vs. fair value in late trading Tuesday. During the regular session, the major averages fell in above-average volume. But the S&P 500 index closed above its 50-day moving average. Leading groups generally held up well. And leading stocks, from Apple (AAPL) to Wal-Mart (WMT) to FANG stocks Facebook (FB) and Netflix (NFLX) to biotech breakouts such as Celgene (CELG) and Biogen (BIIB), acted normally or outperformed amid a negative session.
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Major Averages Find Support
The S&P 500 index fell 0.8% in Tuesday’s stock market trading. The Nasdaq composite retreated 0.9% and the Dow industrials 1.1%. With volume higher than Friday’s, the market added a distribution day, which is not good. But it was the first distribution day since mid-August. Meanwhile, the S&P 500 index and the Dow industrials found support at their 50-day lines after undercutting that key level intraday. The Nasdaq composite, on the heels of its best week in 2017, held above its 50-day throughout Tuesday’s session.
Leading Stocks Act Well
Investors should pay close attention to the action of the major averages but also that of leading stocks. And leading stocks show some strength. Apple fell 1.2% to 162.08 on Tuesday, but that’s still comfortably above a 156.75 flat base buy point. Apple iPhone chipmaker Skyworks Solutions (SWKS) peeked out past a buy point Tuesday morning. Skyworks pulled back, but still finished with a solid 1.3% gain.
Wal-Mart rose 1.8% to 79.80, rebounding above its 50-day line as the discounter tries to retake an 80.57 cup-base buy point.
Facebook dipped 0.8% after a 3.4% pop last week, still only about 2% off a buy point from its newly formed flat base. Netflix dipped 0.1%, holding above its 50-day in its own flat base.
Biotechs Celgene, Biogen and CAR-T drug specialist Bluebird Bio (BLUE) ceded some ground Tuesday after all surged last week. But they closed above their buy points from last week’s breakouts.
Top Groups Hold Up
Most top industry groups fell less than 1%, including video game publishers, homebuilders and biotechs. Among the higher-rated groups losing more than 1%, most were finance-related.
Financials were big losers on Tuesday. Banks were hit by Treasury yields and yield spreads falling to pre-election levels. Property insurers fell as Hurricane Irma grew in strength with Florida in its sights. Airline stocks were hit by Irma and Delta Air (DAL) cutting forecasts for unit revenue and profit margins in the current third quarter.
Tuesday’s action was better than first impressions, while the market is in a confirmed uptrend. But as stocks grind higher with choppy action, it’s difficult for investors to make much headway. A top stock may rally to a buy point and then clear it, but then quickly pull back below that entry, even though the general trend is positive. So investors should be cautious but act decisively when making purchases, taking profits and cutting losses.
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