The Dow Jones industrial average outdueled the Nasdaq composite for the week amid the past week's big batch of quarterly results. Boosted by some of its industrial plays (think Caterpillar (CAT), up 7% for the week), the Dow industrials inched almost 0.2% higher on Friday for a fourth straight advance to new all-time highs and a weekly gain of 1.2%.
X In contrast, the Nasdaq composite lost 0.1% on Friday and ended the week off 0.2%. It was plagued by steep drops by some FANG names including Google-operator Alphabet (GOOGL) (up nearly 0.5% Friday but down 3.6% for the week).
The S&P 500 finished the week practically break-even.
The Nasdaq, however, continues to be the premier index of U.S. growth companies, rising 18.4% since Jan. 1 vs. a 10.5% lift for the Dow 30.
Alphabet reported highly respectable numbers for Q2 (EPS up 27%, revenue up 21%, after-tax margin up 140 basis points to 24.1%), yet investors were clearly displeased with news that Alphabet may have seen its traffic acquisition costs going up following a new contract with fellow Silicon Valley stalwart Apple (AAPL).
Apple showed resilience both on Thursday and Friday despite falling in price both days. Why? It's trying to stay on the north side of its 50-day moving average. That would bode well for the current uptrend since its Jan. 6-9 breakout from a bottoming base pattern at 118.12.
The Dow transports dropped more than 2.5% for the week, its worst weekly performance since a nearly 3.6% dive in the week ended June 24, 2016.
Big losses by airline, ship, railroad and logistic companies hurt the important sector index, even amid a report that showed the U.S. GDP rebounded a bit in the second quarter, up 2.6%. GDP was up from a downward-revised 1.2% gain in Q1.
Cheap ticket airline and former stock market leader Spirit Airlines (SAVE) collapsed more than 20% for the week, hitting its lowest level since September of 2016. Even before its plunge, the stock triggered a key sell signal when it fell 8% below a recent breakout from a flawed cup with handle at 59.64 during the week ended May 12.
Southwest Air (LUV) slumped more than 5% for the week but bounced off its 40-week moving average, which behaves similarly to the 200-day moving average on a daily chart.
Returning to Alphabet hasn't yet triggered the golden rule of selling, but shares had an awful weekly showing, falling 3.7% in steep turnover and undercutting its 10-week moving average. More than 17.6 million shares exchanged hands for the week, the biggest weekly volume since February 2016.
As noted in a prior Stock Market Today column, Alphabet etched a flawed double-bottom base, which raised the risk of a breakout failure. Double-bottom bases must be a minimum seven weeks in length. A better interpretation is a flat base with a 1,008.71 buy point.
In other financial markets, crude oil topped off a splendid rebound as U.S. oil futures jumped another 1.3% to $49.69 a barrel, racing more than 8.5% higher for the week. The euro charged higher, finishing the week near $1.1755.
The yield on the benchmark U.S. Treasury 10-year bond edged higher for the week, finishing near 2.29%.
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