U.S. stocks got off to a riveting start to the new year, particularly in the tech sectors, as Apple (AAPL) behaved the way one would expect for a leading stock that is testing support at a key technical juncture.
X Apple, the global consumer electronics and digital services play, rose more than 1.5% to 172.01 and bounced off its rising 50-day moving average.
The 50-day line, which graphs a stock’s average closing price over the trailing 50 trading sessions, has been rising ever since the stock edged slowly after a key breakout from an early-stage base on Jan. 6, 2017.
More recently, Apple on Oct. 27 cleared a new second-stage cup with handle at 160.97 and volume was brisk, 64% above the stock’s 50-day average turnover.
Apple and fellow Nasdaq tech giant Alphabet (GOOGL) (up 1.9%) helped lead the Nasdaq composite up more than 1.3%. The Nasdaq 100 rallied 1.6%; the index-tracking PowerShares QQQ Trust (QQQ), also up 1.6%, was about half a point below the all-time high of 158.77.
The S&P 500 rallied more than 0.6% as investors also scooped up shares in infrastructure and building materials firms (please see the prior Stock Market Today column for more details), top Chinese company ADRs that are highly profitable and growing strong revenues, steel, automaker and generic drug groups.
The Steel-Producers group is shaping up as Tuesday’s top performer among the 197 groups tracked each day by IBD (see the entire list by going to Data Tables within the Stock Lists section of Investors.com).
Strength in Apple, Chevron (CVX) (extended after a December breakout past a base on base at 120.99) and Walt Disney (DIS) (forming a new base) helped the Dow Jones industrial average edge 0.2% higher, overcoming a sell-off in insurance titan Travelers (TRV).
Meanwhile, Bitcoin Investment Trust (GBTC) got off to a great start in 2018, rising more than 12% to 2,279.50 in dull trading. At the end of 2017, even after a deep four-session plunge that took the Bitcoin-tracking ETF from as high as 3,522 to as low as 1,155, Bitcoin Investment still finished the year with a 1,556% return.
It’s likely that interest in Bitcoin is set to only rise, given the growing acceptance of e-commerce, digital transactions, concerns over the unusual gains in U.S. and other equities in 2017, and the relative “newness” of the alternative currency. The fact that both the CME Group and Cboe now conduct futures trading in Bitcoin is one of this currency’s greatest accomplishments over the past few months.
Watch to see how Bitcoin Investment acts around both the 10-day and 50-day moving averages. The latter has been catching up some, now well above 1,400. But the 50-day moving average, which usually acts as an excellent defense-oriented sell signal when a growth stock torpedoes through it in huge volume, has not been an effective timing indicator for this ultra-hot ETF.
Going back to Apple, amid all the speculation that the iPhone marketer is going to go on a huge shopping spree, investors should continue to simply monitor the price-and-volume action on a daily or weekly basis. And so far, the action remains healthy. One big reason is the possibility for further double-digit top and bottom line growth.
Two, earnings growth may accelerate.
The Street sees earnings rising 24% in the current fiscal year ending in September to $11.46 a share, up from an 11% jump in FY 2017 (ended in September that year). Services revenue is one big part of that picture. New products or new editions of the iPhone, Macbook and Apple Watch form another big part.
Apple’s ratings on Stock Checkup remain good, including a 90 Composite Rating and a decent B- grade for Accumulation/Distribution, which hints that fund managers are net buyers over the past 13 weeks of trading. The Accumulation grade goes from The C rating is neutral.