Banking and oil stocks helped fuel light gains for some key indexes Monday, but the Nasdaq got weighed down by a broad decline in large and mega-cap techs.
XThe Dow Jones industrial average gained more than 0.6% despite poor performances by two of its tech components, Intel (INTC) (down 0.9%) and Microsoft (MSFT) (off 1.1%). Strength in names such as JPMorgan Chase (JPM), Goldman Sachs (GS) and Chevron (CVX) helped offset the slide in tech land.
As seen in a daily chart, JPMorgan has risen further past a 89.23 buy point in a shallow double-bottom base. The stock had been featured in past Stock Market Today columns during the summer as it broke out of a first-stage bottoming base pattern at 65.08, 10 cents above the 11-week cup-with-handle formed from May 25 to Aug. 4.
The S&P 500 gained 0.2% while the Nasdaq composite sank 0.5%. The Nasdaq 100 slid 0.9% during the July 4th holiday-shortened session. U.S. markets will be closed Tuesday for Independence Day.
Small caps did the best during Monday's 3-1/2-hour trading session. The S&P SmallCap 600 rallied nearly 0.9%; the Russell 2000 added 0.8%.
In other markets, crude oil continued last week's surprising rebound as WTI futures jumped 1.7% to $46.81 a barrel, the highest level since June 6.
Not surprisingly, among IBD's 197 industry groups, oil and gas machinery, oil field services, drilling and international exploration and production firms led the upside; these industry groups shot up 2.8% or higher.
Intel has been struggling since it fell more than 2% on June 9 and took out its 50- and 200-day moving averages in the process. Since then, the former leader during the 1990s tech bull market has fallen 13% from a 52-week high of 38.45.
As seen in IBD Stock Checkup, Intel gets a lowly D- Accumulation/Distribution Rating, meaning that over the past 13 weeks, institutions are likely net sellers in the stock.
Intel looked poised for a solid rally on Jan. 24, when shares cleared a 15-week cup-with-handle base at 37.44. The stock rose 2.3% that day to 37.62, in volume that jumped 82% above average. However, Intel's rally lasted just three days; by early February, the mega-cap semiconductor play dropped below its 50-day line (drawn in red, as seen in the daily chart above).
While that decline on Feb. 9 had not yet triggered the golden sell rule, it was a clear indication that Intel's stock action was not behaving the way you'd expect following a solid breakout.
Eventually, Intel triggered the 7%-8% loss-cutting sell rule on March 14, when shares hit an intraday low of 34.66.
Microsoft is in less worse shape. The business software, cloud computing and Xbox firm is just 6% below its 52-week peak but is struggling to retake its 50-day moving average in recent sessions.
Notice on a daily chart, however, that unlike Intel, Microsoft has a big air cushion above its rising 200-day line.
On a head-to-head count, Microsoft proves to have better growth than Intel. The former owns a 72 EPS Rating (its earnings over the past three to five years have beaten 72% of all publicly traded companies in IBD's database) and it has grown earnings for eight quarters in a row, while the latter has a slightly better EPS Rating at 75, yet has posted EPS increases in just six of those eight quarters.
Microsoft is also expected to increase earnings by 9%, to $3.03 a share, in FY 2017 (ended in June) and another 10% in FY 2018. In the current year, analysts on consensus see Intel's earnings rising 5% to $3.86 a share.
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