U.S. stocks found early strength Tuesday, but a bullish signal has yet to emerge in the market. The stock market benefited from an optimistic outlook for a software leader and stronger than expected earnings in financials.
XThe Nasdaq advanced 1.9%; the Dow Jones industrial average, 1.5%; and the S&P 500, 1.5%. Small caps lagged a bit as the Russell 2000 added 1.3%.
Volume fell on the NYSE but rose on the Nasdaq vs. the same time Monday.
Adobe (ADBE) offered a bullish forecast for 2019 late Monday. Shares rose about 4% after hours. In late morning trade Tuesday, Adobe surged 7% in heavy volume. The stock recently found support at the 200-day moving average and is trying to challenge the 50-day line.
Two bank stocks reporting quarterly results found traction. Morgan Stanley (MS) beat the Street's consensus figure by 15%. The stock popped 4.5%. Dow Jones stock Goldman Sachs (GS) beat analysts' consensus estimate by 17%. Goldman rose almost 3% but then pared the gain to 1.4%.
Both stocks are more than 20% off their highs. Bank stocks are currently market laggards.
Medical Stocks Lead
In the 30-component Dow, two medical stocks led the blue-chip pack. UnitedHealth Group (UNH) gained 3.5% after topping Q3 earnings by about 4%. Johnson & Johnson (JNJ) added 2% after edging 1% above views.
UnitedHealth and J&J are 1% and 7% off their highs.
Breakouts were scarce Tuesday. Integrated oil play Imperial Oil (IMO) was one of the few stocks crossing a buy point. The stock gained 2% as it cleared a 34.39 buy point. Imperial is thinly traded, turning about 250,000 shares daily.
The Innovator IBD 50 Fund (FFTY), an exchange-traded fund built on the IBD 50, climbed about 2%. The ETF was up 17% year to date at its Oct. 1 peak but an ugly pullback trimmed the 2018 gain to less than 2%.
No Bullish Signal Yet
Since Wednesday, IBD's market outlook has been in correction mode. Tuesday's bullish action doesn't change that. IBD's proprietary market signal has yet to confirm that a new uptrend is underway.
Individual investors should wait for that signal before buying stocks.
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