April Webinar RegistrationApril Webinar Registration


Dow Jones Escapes 'Game Of Thrones'-Like Torching Of Tech Stocks; 4 Stock Market Leaders Up

Stocks today witnessed a "Game of Thrones"-like torching of chip, internet and select software sectors on Monday as the White House ratcheted up the trade war with China. President Trump has imposed a ban on American corporations doing business with 5G wireless and telecom giant Huawei Technologies. The Dow Jones Industrial Average, however, fared much better than the Nasdaq.

X

The 30-stock Dow, off around 0.3%, benefited from a 4-point gain by component UnitedHealth (UNH). A few financial plays, including American Express (AXP) (up more than 0.6% to make a year-to-date closing high), Travelers (TRV) and JPMorgan Chase (JPM) also sidestepped the fiery sell-off with gains of less than 1% each.

AmEx is emerging as a potential leader among megacap stocks. The Dow Jones blue chip on April 25 shot past a 114.35 proper buy point in a shallow cup with handle in volume that almost rose 40% above its 50-day average. Heavy volume on the breakout is an unmistakable sign of strong appetite for shares among institutional-class investors.

AmEx has now advanced 4.8% past the entry point. So, the stock remains within the 5% buy zone.

Meanwhile, telecom giants surged after the head of the FCC recommended that the U.S. government approve a merger plan between T-Mobile US (TMUS) and Sprint (S). But Verizon and its peers gave back some gains on reports that the Department of Justice opposes such a merger on antitrust issues.

Nasdaq Falls Much Harder Than The Dow Jones

The Nasdaq composite got knocked down by 1.5%. The Nasdaq 100-tracking Invesco QQQ Trust (QQQ) dropped a bit more, falling 1.6%. The ETF tracks the 100 largest nonfinancial companies on that all-electronic exchange.


NEW! Investing With IBD Podcast: Get The Latest Episode And Subscribe For Free Today


Volume fell on both exchanges, according to early data.

Investors clearly got defensive. The Dow Jones utility average edged up 0.1%.

At 791, the Dow utilities now hold an 11% gain year-to-date.

The Innovator IBD 50 ETF (FFTY), which no doubt has an "overweighting" in tech stocks, dropped nearly 1.6% and is wrestling with its 200-day moving average.

Meanwhile, Stocks On The Move revealed four highly rated stocks that actually rose in above-average volume. Such action signified that money flowing out of the tech sector made its way into companies that perhaps hold less China-related business risk.

Of course, the Stocks On The Move table shows a far greater number of companies making the down-in-price portion of the table during a broad sell-off like the one on Monday. Still, Stocks On The Move can alert IBD readers of stocks showing uncommon strength and possibly setting up a potential breakout from a good base.

Crushing The Dow Jones Today

Five Below (FIVE), an innovator in discount retailing and longtime market leader, recouped two days' worth of losses and more with a nifty reversal. The midcap growth stock gained more than 2% in heavy volume and closed right at its rising 50-day moving average.

IBD Stock Checkup shows a smart 95 Composite Rating for Five Below.

Darden Restaurants (DRI) gained nearly 3%. The restaurant chain retook a 122.47 entry on a base on base. It initially cleared a 113.48 entry point in a handle on a base that largely holds the shape of a mild double bottom. Shares rallied nearly 8% but failed to reach a new high before pulling back to begin the upper part of its base on base.

The Orlando-based company owns the Olive Garden, Longhorn Steakhouse, Yard House sports bar and grill, Capital Grille and other nationwide chains.  Besides a respectable 88 Earnings Per Share Rating on a scale of 1 (horrible) to 99 (heavenly), growth forecasts look delicious. Analysts surveyed by Refinitiv see the large cap growing earnings 20% to $5.79 a share in the current fiscal year ending in May and another 12% to $6.47 in FY 2020.

This India Bank Roasts The Bears Amid Election News

India's HDFC Bank (HDB) gapped up in bullish fashion, rising more than 6%. Volume surged 144% above its 50-day average following victorious election results for Prime Minister Narendra Modi's incumbent party. News reports noted exit polls indicate Modi will win his reelection bid.

HDFC cleared a 104.60 proper buy point in a megasize cup with handle in March.

The lending giant has been a bastion of steady bottom-line growth. The Street sees profit rising 21% to 93 cents a share in the second quarter.

Earnings per share lifted 25%, 22%, 27%, 18%, 10%, 5%, 6% and 39% vs. year-ago levels in the past eight quarters.

According to IBD Stock Checkup, HDFC holds a respectable 92 Composite Rating on a scale of 1 to 99.

In the foreign banks industry group, no other stock shows a Composite Rating of 90 or higher. Banco Santander (BSMX) of Mexico ranks No. 2 with a 76 Composite.

The Composite Rating melds measures of fundamental strength, stock price action and the quality of fund sponsorship into a single easy-to-use score. Use the rating to save time in selecting growth stocks; use charts to pinpoint the right time to buy stocks and the best time to sell stocks.

Finally, T-Mobile rallied nearly 4% in volume that vaulted nearly six times its usual level. The stock is getting extended past a 74.16 entry point in a base on base.

Please follow Chung on Twitter at @SaitoChung and @IBD_DChung for more on growth stocks, breakouts, sell signals and financial markets.

YOU MIGHT ALSO LIKE:

After Hours: Four Top Stocks Moving For This Reason

IBD 50 Stocks To Watch

These Growth Stocks Still Keep A Spot On IBD Leaderboard

In This New Stock Market Correction, What Are The True Market Leaders Communicating?

Inside Big Cap 20: Make A Watch List Of Great Big Cap Stocks Here