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Stocks Mixed, Nvidia Down 2.5%; Is Apple Still Poised For A Breakout?

An afternoon rally took the bite out of a decline by some key indexes on Thursday, and the Nasdaq showed enough strength to post a third straight gain Thursday.

Apple (AAPL) acted bullishly, rising 0.5% to 116.61 and putting more work into the crafting of a handle on its latest cup-with-handle pattern.

While a new base-on-base pattern has produced a 118.79 entry, 10 cents above the new base's left-side high, check out the daily chart and you'll see that the iPhone and iPad giant has now etched a downward-slanting handle over the past week, presenting a slightly lower buy point at 118.12.

In September, as noted in an IBD Stock Market Today column, Apple cleared a 110.33 buy point within a cup with handle that was lodged within a long, deep, bottoming base pattern, then rallied 7.5% before pulling back and testing vital support at the long-term 200-day moving average.

Meanwhile, Nvidia (NVDA) continued to show signs that while it's indeed undergoing a price correction, the decline has so far been controlled.

The leading graphics processors firm fell 2.5% to 101.74, extending its decline from a 119.93 high to 15%. That's the maximum allowable price decline for a flat base, which must form over a minimum five weeks.

That's totally normal for a stock that achieved one of the biggest gains last year, rising 262% past a 33.16 cup-with-handle buy point in mid-March 2016.

The Nasdaq composite erased mild morning gains by around 12:45 p.m. ET and finished the day up 0.2%. The Nasdaq 100 did even better, gaining more than 0.5%, as Apple and other large-cap techs rallied.

Retailers, however, fell hard after poor guidance and plans of massive store closings from big-box retailers Kohl's (KSS) and Macy's (M). Both stocks got trampled by sellers, falling 19% and 14%, respectively. The S&P 500 closed less than 2 points lower; the Dow Jones industrials fell 0.2%.

Volume was slightly lower on both exchanges vs. Wednesday, according to preliminary data.

Returning to Apple, the megacap's RS Rating of 56 has been largely unchanged over the past nine weeks, which is unsurprising given the long basing nature of the stock lately.

On the other hand, the B- Accumulation/Distribution Rating, as seen in IBD Stock Checkup, is bullish, indicating funds are on net accumulating shares.

Wall Street sees Apple's sales rising 2% to $77.4 billion in the December-ended fiscal fourth quarter. That could mark an end to three quarters in a row of falling revenue and signal that Apple is gaining market share in the smartphone industry and succeeding in keeping up fast growth in its services-related businesses.

A sharp beat on the top line could also lead to a surprise increase in quarterly profit, which may catalyze the stock to further gains. Right now, the Street sees earnings falling 2% to $3.22 a share, but then rising 12% to $2.13 a share in the current quarter that ends in March.

Apple's earnings fell 13%, 15% and 9% in the prior three quarters.

Constellation Brands (STZ), one of the largest alcoholic beverage companies in the world, slid 7% to 146.75 and slumped back below its 50-day moving average despite posting a 38% bulge in fiscal third-quarter earnings per share. After-tax margin rose to 22.3%, the highest in at least four years.

Sales grew 10% to $1.81 billion, the smallest year-over-year gain in four quarters. In the prior three quarters, Constellation's sales grew 14%, 15% and 17%.

Constellation shares have been in correction mode since it failed to make much headway following a breakout past a long flat base-like pattern in the week ended Oct. 7. The RS Rating has slumped to a lowly 28, and the Accumulation/Distribution grade of D+ hints at strong professional net selling.

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