Indexes Down In Erratic Session; Gigamon Soars; Why You Should Hold Apple

Stocks closed lower Friday in a volatile session, capping a week of losses for the Nasdaq and S&P 500.

The Nasdaq slumped 0.5%, near its session lows. The tech-heavy index ended the week down more than 1%. The S&P 500 was off 0.3% and 0.6% lower for the week. The Russell 2000 fell less than 0.3% Friday.

The Dow Jones industrials, meanwhile, rallied from early losses to close a fraction lower as three of the 30 components rose 1 point or more. Component Chevron (CVX) led the upside, rising 4% — good for a three-month high. The megacap oil play burst back above its 50-day moving average in volume running more than 150% above normal levels, and is now better poised for a potential breakout from a decent flat base at 107.68.

As seen on a weekly chart, that flat base could also be viewed as a long handle attached to an aircraft carrier-sized saucer pattern.

Chevron reported a 38% fall in third-quarter earnings to 68 cents a share, but that smashed the consensus forecast. Sales fell 12%, the smallest drop on a year-over-year basis in eight quarters.

While most big-cap techs bore the brunt of the heaviest selling, a few leaders in that space showed resilience, including network-security play Gigamon (GIMO) and Apple (AAPL).

Tesla (TSLA), meanwhile, dropped 2%, sinking back below its 50-day moving average despite issuing an outstanding third-quarter report earlier in the week. As this column has noted, the EV maker needs a lot of time before it can prove that it can form a viable new base in which to set up a proper breakout.

Apple was off 0.7% in light trade. Yet as seen on a weekly chart, the stock's rally from a 110.33 cup-with-handle buy point in a long bottoming base remains intact. The stock is also getting support at the 10-week moving average, a sign of resilience.

Apple, finishing at 113.69, lies 3% above the 110.33 proper entry point. Wall Street sees earnings in the current fiscal quarter down 2% to $3.23 a share. That would extend Apple's streak of falling earnings per share to four quarters, but it would also be the smallest decline.

Also in tech land, small-cap Gigamon soared 16%, rising back above its 50-day moving average and notching an all-time high despite triggering a pair of sell signals, including its biggest single-session point drop on Oct. 5 and a deep undercut of the 50-day line on Thursday. The data-security platform provider blasted analysts' Q3 views as earnings vaulted 64% -- the fifth quarter in a row of 50%-plus EPS growth — as revenue jumped 47%.

Gigamon is a member of the IBD Sector Leaders, one of IBD's most stringent stock screens for fundamentals, technical action, and institutional sponsorship.

Ellie Mae (ELLI), the mortgage-processing software expert, leapt past a 102.73 flat-base buy point as it powered ahead more than 10% in heavy trading. Ellie's earnings grew 60% to 72 cents a share, accelerating from increases of 16%, 3% and 33% in the prior three quarters.

Revenue smashed the $100 million barrier, rising 46% to $100.4 million, and revving up from year-over-year top-line gains of 39%, 36% and 37% in the prior three periods.

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