Stocks showed this week that the institutions are increasing their appetite for equities and restricting their diet for long government bonds in the wake of the historic Nov. 8 Donald Trump election victory.
Meanwhile, Apple (AAPL) proved to the bears that it should not yet be counted out from the new market leadership race, despite having given back all of its mild 7%-plus gain in a Sept. 14 breakout from a long bottoming-base pattern. The tech giant rose fractionally on Friday to 110.01, less than 1% below its recent cup-with-handle entry at 110.33.
The Nasdaq composite and the S&P 500 both edged 0.2% lower, yet closed the week on the upside. Also, both indexes finished above their respective 50-day moving averages for a second straight week, an encouraging sign.
Volume on the Nasdaq edged a bit lower Friday but rose on the NYSE, according to preliminary data.
The Dow industrials slipped 0.2% but still gained fractionally for the week. The Russell 2000 rose nearly 0.5% on Friday en route to a 2.6% gain for the week, adding to the prior week's huge 10% catapult higher.
WTI crude oil futures edged higher to $45.43 a barrel, continuing to remain locked in a band of $40 to $50 built over the past seven months.
The yield on the 10-year U.S. Treasury yield rose to 2.33%, according to Tradeweb.
Earlier in the week, Macom reported a 50% jump in Q3 profit as revenue grew 36% to $153 million, faster growth than gains of 20% to 30% in the prior four quarters.
Macom's cup is "unusual" because the handlelike action that took place in the weeks heading up to the U.S. presidential election presented a decline normally too deep to be a healthy handle. Remember, the typical decline from intraday high to intraday low within a proper handle is 8% to 12%.
However, given the market's jitteriness in October to early November, it's understandable to see stocks such Macom, a small cap at $2.5 billion, see bigger shakeouts ahead of a strong breakout.
Apple's RS Rating of 54, as seen in IBD's Stock Checkup tool, is still mushy. You'd like most stocks to see an RS Rating of 80 or higher when they break out. But long bases of a year or more tend to squash the RS Rating down well below the 80 level.
As IBD tech writer Patrick Seitz noted in a post earlier this week, Piper Jaffray analysts Gene Munster and Michael Olson told clients in a note that it was time to buy — amid the fear in Apple and other so-called "FANG" stocks that was generated by open speculation that President-elect Donald Trump would engage in unfriendly tax and trade policies aimed at the Silicon Valley tech giants.
Also in tech, Salesforce.com (CRM) gapped up strong at the open and rose to a session high of 80.37, up nearly 7%, before cutting the gains down to 3% and closing at 77.77. Volume jumped more than 120% its 50-day average level. Despite the stock's reversal, it was a well needed rally for the big-cap software name following weeks of struggle below its 200-day moving average.
Interestingly, the 200-day line flattened in October and began to slope mildly higher three weeks ago, a positive sign. For now, the stock needs more time to build the right side of a base that already features numerous sharp sell-offs in heavy volume. Fortunately, the Accumulation/Distribution Rating has improved to a B-, according to IBD Stock Checkup.
Late Thursday, the expert in customer relationship management, marketing and sales-related business software posted a 14% increase in earnings to 24 cents a share in the October-ended fiscal third quarter. That marked a second straight slowdown in EPS growth, following gains of 36%, 50%, and 26% in the prior three quarters, but still beat the Wall Street consensus estimate by 3 cents.
That 14% profit increase also was the smallest gain since a 10% rise in the first quarter of fiscal year 2015 that ended in April 2014. However, prospects of a re-acceleration in EPS growth look good, as the Street sees January-ending Q4 earnings up 32%, to 25 cents a share.
New small-cap consumer-stock leader Planet Fitness (PLNT) lost another 1%, to 20, holding above a recent cup-with-handle entry at 19.57. Watch for news on how the no-nonsense gym operator prices an offering of 15 million shares.
RELATED:
Is It Time To Invest In A New Bull Market?
Is It Time To Sell Cisco Systems? No. Here's 3 Reasons Why
How Can Individual Investors Profit From The Bottoming-Base Pattern?
