At least 10 of the 30 components of the Dow Jones industrial average gained 2 points or more to help power the blue chip index to a nearly 1.2% gain and a leading position within Thursday’s broad market rebound.
X Goldman Sachs (GS) led the way in terms of point gain, rising more than 6 points, or nearly 3%, to 247.64. At one point, shares moved past a 247.84 buy point in a nearly nine month saucer with handle. Apple (AAPL), meanwhile, stretched its gains from an Oct. 27 breakout from a good cup with handle and a 160.97 buy point by rebounding 2.22, or 1.3%, to 171.70 in fast turnover.
The gain for Apple from latest correct buy point is now back to 6.7%. The iPhone giant has also risen 45% since marking a breakout from a bottoming base on Jan. 6-9. At that time, Apple also cleared a cup with handle, shoving past a 118.12 entry.
The Nasdaq composite worked on recouping much of Wednesday’s 1.3% drop, rising around 0.7%. The Nasdaq 100, which tracks the 100 largest nonfinancial companies in the all-electronic exchange, rebounded nearly 0.8%. The S&P 500 rallied 0.7%. Volume is running slightly lower vs. the same time Wednesday on the NYSE and sharply lower on the Nasdaq.
In other financial markets, investors trimmed more of their long-term government bond holdings ahead of a widely expected Federal Reserve hike in interest rates. The yield on the benchmark U.S. Treasury 10-year bond rose to 2.41%, the highest since late October.
Transport stocks continued to thrive.
Railroad giant CSX (CSX) rolled past a 55.09 entry in a 19-week flat base and is up nearly 9% for the week. Volume is heavy, running more than 60% above its usual pace. The RS line, drawn in blue on IBD’s daily and weekly charts, is not at all-time highs but is rising sharply in recent weeks.
Norfolk Southern (NSC) joined the breakout train, rising 2% in spirited volume and moving past a 134.62 buy point.
Both Norfolk and CSX have shown improved fundamentals, at least on a quarterly basis. The former has grown profit 9%, 15%, 26% and 13% vs. year-ago levels over the past four quarters, while the latter has seen EPS gains of 21%, 38%, 36% and 6%. CSX’s profit, however, is seen dipping 2% to 57 cents a share, due in part to a tough year over year comparison.
The Dow Jones transports, up 3.3% and posting a closing high on Wednesday, ramped another 2.1% higher to all-time highs.
Apple, Big Winner In 2018 Too?
Back to Apple, the company has shown improving fundamentals over the past 12 months, and the Street appears confident that the turnaround will continue. Over the next two quarters, analysts on consensus see earnings growing 12% and 39%. That would extend Apple’s streak of double-digit EPS growth to five straight quarters.
Revenue increases are helping drive those positive expectations.
In the fourth quarter of fiscal 2016, ended in September that year, Apple’s sales slumped 9%. After that, revenue turned around, rising 3%, 5%, 7% and 12% in the next four quarters. Apple is now seen growing the top line 10% in the current first quarter (ending in December) to $86.18 billion, then another 30% to $68.77 billion in Q2 of fiscal 2018.
Strong orders for the ultra-luxury iPhone X, a major iPhone replacement cycle, strength in digital services, increasing popularity of the cellular-enabled Apple Watch, and other products are helping continue Apple’s dominance in consumer electronics.
Apple’s stock price strength also is improving. According to IBD Stock Checkup, the Relative Price Strength Rating is a respectable 80 on a scale of 1 (weak) to 99 (strong), up sharply since Jan. 1.
Chips Look Chipper
Semiconductor stocks are trying to rebound. Nvidia (NVDA), a leader in chips for artificial intelligence, data center, self-driving and virtual currency markets, is trying to stem its decline after briefly sliding through the 50-day moving average on Wednesday. Shares gained 1.5% on Thursday afternoon. The long-term uptrend is intact, and Nvidia still holds a 14% gain since clearing a narrow flat base with a a 174.66 buy point on Sept. 15.
Nvidia is facing tough year-over-year comparisons after posting large double-digit to triple-digit earnings gains since the second half of fiscal 2017, ended in January. Yet Wall Street still anticipates solid growth in the quarters ahead. Analysts on consensus forecast a 16% rise in January-ending Q4 profit to $1.15 a share on a 22% jump in sales to $2.66 billion, which would be a quarterly best.
Growth is expected to reaccelerate in Q1 of fiscal 2019, with earnings rising 24% to 98 cents a share on a 27% pickup in sales to $2.46 billion.
In addition to the Senate’s vote on a major tax reform bill that could sharply reduce corporate taxes, Wall Street will focus on the ISM manufacturing survey for November, due Friday at 10 a.m. ET.
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