Stock Market Tests Support As This Key Tech Sector Sells Off: Afternoon Update – Investor’s Business Daily

The stock market held heavy losses in afternoon trade Thursday, as a key support level loomed. But FANG leader Amazon.com (AMZN) held strong gains in the stock market today. Meanwhile, IPO Leader and IBD 50 name Canada Goose (GOOS) is trying to break out past a potential buy point.

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The tech-heavy Nasdaq declined over 1%, while the S&P 500 fell 0.9%. The Dow Jones industrial average gave up just 0.7% — buoyed by strong earnings results from American Express (AXP). Meanwhile, the payment processor jumped nearly 6%, but is back below a 102.49 flat-base entry.

All three major indexes were nearing their 50-day moving average support levels.

While there was substantial weakness in the tech sector, financial stocks were strong outperformers midday as the 10-year Treasury moved above 2.9%. Top retail brokerage firm Charles Schwab (SCHW) advanced 1.5%, as it attempted to regain its 50-day line. The company reported strong earnings results Monday.

Among companies reporting earnings, W.W. Grainger (GWW) jumped as much as 8.8% after reporting strong Q1 results early Thursday before trimming its gains to about 4%. The industrial supplier also raised its full-year guidance. Shares are regaining their 292.57 cup-with-handle entry in strong volume and are in buy range. The 5% buy range tops out at 307.20.

Grainger’s April 5 breakout sputtered after rival Fastenal (FASTdisappointed investors last week, but Grainger never triggered the 7% to 8% sell signal. Still, it’s always riskier to hold a loss through an earnings release.

Chip stocks were battered Thursday after Taiwan Semiconductor (TSM) reported weaker-than-expected earnings results. Taiwan Semi is a major chipmaker and partner of both Apple (AAPL) and Nvidia (NVDA). Morgan Stanley said that smartphone weakness is the main reason for the revenue shortfall.

Dow name Apple fell more than 2%, but remains above its 50-day line. The stock is drawing a flat base with a 183.60 potential buy point. Meanwhile, IBD 50 name and graphics-chip maker Nvidia declined 3%. Shares are being turned away from the 50-day moving average, which has become an apparent resistance level.

Top chip names Micron Technology (MU), Applied Materials (AMAT) and Lam Research (LRCX) all held losses exceeding 5%. Micron continues to shape the right side of a potential base, as it barely clings to its 50-day line.

Meanwhile, Applied Materials and Lam continued to break down after Tuesday’s sell-off and are well below their own 50-day lines. Lam reported weak guidance late Tuesday.

Lastly, MKS Instruments (MKSI) stumbled nearly 7%, as it broke down through its 50-day line in heavy volume. Its earnings are due out Tuesday after the close.

FANG stock Amazon.com rose about 1.5% after CEO Jeff Bezos said in his annual letter to shareholders that the company had exceeded 100 million paid Prime members globally. The Leaderboard name extended its win streak to four trading sessions, which has brought the stock back above its 50-day line. The e-commerce giant is shaping the right side of a potential base.

Inside The IBD 50

Among leading growth stocks, Canada Goose broke out above a 36.76 cup-with-handle entry, as the stock rose about 4%. Shares are just under that level midday. The base structure isn’t the most elegant formation, given the stock’s sharp descent in early February. Still, volume is tracking at triple above average and the relative strength line has been holding up as well.

On the downside, LGI Homes (LGIH) declined over 4% to fall back under a 72.10 cup-with-handle entry. Shares have been volatile since an April 5 breakout. Homebuilder NVR (NVR) missed sales estimates and bond yield rose, hurting the building stocks.

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