Apple (AAPL) sold off badly Friday and touched its 200-day moving average for the first time since mid-February. Stock market bears also sent the major indexes tripping below their 50-day moving averages Friday for the first time in four to five weeks.
XThe Nasdaq composite slid 1.3%, the S&P 500 nearly 0.9% and the Dow Jones industrial average 0.8%.
Yet the major indexes still managed to march higher for a second week in a row in the wake of a key follow-through that took place April 10.
Square (SQ), meanwhile, offered fresh proof that it remains a true market leader. Shares ran up more than 1.6% to 51.46, stretching a year-to-date advance to more than 48%. Square was a huge winner in 2017 as well.
In addition to Square, TransUnion (TRU), Charles Schwab (SCHW), E-Trade Financial (ETFC) and Western Alliance Bancorp (WAL) all showed bullish action, blasting gains of 2% to 10% or more.
Schwab continues to work on a new base, while eTrade is now extended after recently retaking a 56.10 entry point in a six-week cup without handle.
The yield on the benchmark U.S. Treasury 10-year bond continued to soar, rising to as high as 2.94% and practically eclipsing the Feb. 21 year-to-date high. Higher interest rates help boost net interest profit margins for banks and other financial firms.
Square, the San Francisco-based digital transactions and business analytics innovator, rose 1.6%, climbing as high as 52.50 in below average turnover. The large-cap tech is likely in the middle of forming a new base on base.
Wall Street sees the Jack Dorsey-led tech firm growing its full-year profit by 70% to 46 cents a share this year and another 65% in 2019.
Square has ramped 182% higher since it cleared a tightly wound flat base with an 18.27 buy point in April 2017.
This Chart Looks Bullish
The base-on-base pattern can be an awesome generator of price gains, but only when selling pressure in the overall market eases and the stock market is in a confirmed uptrend. The April 10 follow-through improved the stock market's outlook in raising it from "Market in correction" to "Confirmed uptrend."
Square shows an excellent Composite Rating of 96 on a scale of 1 to 99 on IBD Stock Checkup.
The Nasdaq composite sank nearly 0.5% at the get-go, then stretched losses to more than 1.3%, following a 2.8% rally last week. Volume was lower from Thursday's level, according to preliminary data. At 7138, the leading index still clung to a weekly gain of roughly 0.5% and is up 3.4% since Jan. 1.
So the tech-centered index was still up for the week, but closed below the key 50-day moving average. The Nasdaq 100-tracking PowerShares QQQ Trust (QQQ) ETF fell 1.6%. It too slipped mildly beneath the 50-day moving average for the first time in nearly four weeks.
Hand tools, shoes, paper, and numerous defensive industry groups paced the downside.
The S&P 500 saw its weekly gain slim down to 0.5%. In the prior week, the large-cap benchmark rallied 2%.
Turnover climbed roughly 14% higher vs. the same time on Thursday on the NYSE. Overall, though, trading volume has been holding below the 50-day average on the Nasdaq for at least two straight weeks. On the NYSE, trading has been muted for nearly three weeks in a row.
This Dow Stock Is Basing Now
Typically, the best follow-throughs, which give alert investors a chance to hunt for breakouts among leadership-quality stocks in terms of excellent fundamentals, relative stock price strength, and fund sponsorship, take place on Day 4 through Day 7 of a new rally attempt. But they can also occur much later than that.
Home Depot (HD) was the sole stock among the 30 components of the Dow Jones industrial average to initially gain 1 point or more. Shares retreated just a fraction to 177.01. Volume was 10% below usual levels.
Home Depot, the DIY home improvement chain, has been in correction mode since striking a new high of 207.61 on Jan. 29. That peak came right before the first of this year's intermediate market corrections. The stock hasn't fallen much, though, losing just 18% of its market value. That's well within range of a normal decline within, say, a cup with handle base or a saucer base chart pattern, which is common among Dow industrials-type issues.
Home Depot has pounded out steady if not rip-roaring profit growth. Earnings per share have lifted 24%, 15%, 18%, 23%, 16%, 14%, 15% and 17% vs. year-ago levels in the past eight quarters. The Street sees fiscal Q1 profit rising 24% to $2.07 a share.
How To View Apple Stock Now
Consumer tech titan Apple gapped below its 50-day moving average. That's a sign of weakness for the iPhone and iPad giant. The stock fell more than 4% and hit an intraday low of 165.43 in intense turnover.
Apple is now tickling its long-term 200-day moving average and is trading around 9% below an all-time high of 183.50.
Apple has already rallied 55% since it burst out of a cup with handle at 118.12 way back on Jan. 6, 2017. So it's due for a rest, but keep watch for a base to complete itself.
As noted in a new Click tech blog post, Morgan Stanley analyst Katy Huberty trimmed her price target on the consumer electronics and digital services firm to 200 from 203, citing concerns on iPhone sales. However, Huberty also reportedly advised clients to buy shares on any price weakness after Apple reports its fiscal Q2 sales (for the March-ended quarter) on May 2 after the close.
A 3-point slice of the price target does not amount to much in terms of market value. At 166, the stock's market value is $841 billion. Apple has 5.07 billion shares outstanding.
A New Base?
Google operator Alphabet (GOOGL) lost just 1.1% to 1,077.32 in weak turnover and still managed to post a stout weekly gain of nearly 4%. Watch to see if it holds above the 50-day moving average, painted in red on IBD daily charts.
The megacap tech may be forming a new double bottom base. The middle peak between the stock's first and second lows is 1,178.16. If the stock can continue rebounding, it could set up a potential breakout at 1,178.26, 10 cents above the middle peak.
Alphabet is expected to increase first-quarter profit 20% to $9.29 a share. That follows EPS gains of 7%, 28%, 27%, 32% and 28% in the prior five quarters.
Among the 11 names currently in Leaderboard, new entrant Intuitive Surgical (ISRG) cooled off a second straight day in normal fashion. The big cap medical play remains in buy range from a 445.20 entry in a shallow cup with handle. Shares eased 1.4% to 456.27 in above-average volume.
A New Financial Sector Leader
Going back to TransUnion, the credit-reporting agency and financial data expert has held a spot on the Leaderboard watch list for more than two weeks. On Friday, the stock gapped up at the open and jumped 10%. Shares got as high as 67.32, easily surpassing a 59.72 buy point in a shallow cup with handle.
The base is better viewed as a flat base with an entry at 61.52, 10 cents above the left-side high. In this case, TransUnion was within proper buy range right at the open price of 64.03, 4% above the flat-base entry.
The expert in consumer financial data posted a 36% jump in first-quarter earnings to 57 cents a share, spanking the Thomson Reuters consensus estimate by nearly 10% and issuing the biggest year-over-year increase in five quarters. Revenue grew 18% to $537 million, marking a third quarter in a row of accelerating top-line growth. TransUnion also announced the acquisition of U.K.-based Callcredit.
This Shoe Drops
Skechers (SKX) got body slammed, gapping down more than 27% and finishing the session at 30.70. That sell-off wiped out five months' worth of gains.
Volume soared past 27 million shares, more than one quarter of its total float of 94 million shares. The stock's 50-day average turnover is 2.4 million shares per day.
The company reported a 13% rise in Q1 earnings to 68 cents a share, sharply undercutting Wall Street's expectations. Sales rose 17%, easing from a 27% Q4 top-line increase, but moving at a faster pace than the year-ago quarter's weak 10% rise.
Net margin edged 20 basis points lower to 8.6%. This decline suggests the shoe giant felt price pressures from the competition or saw its costs climb.
(Please follow Saito-Chung on Twitter at @IBD_DChung for more commentary and analysis on leading growth stocks, buy points, sell signals and financial markets.)
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