The stock market pared gains sharply Thursday at midday, but several top stocks broke out past buy points and small caps led.
XThe Nasdaq composite had only a 0.2% increase left from an early gain of 0.7%. Semiconductor stocks gave the Nasdaq some lift. The iShares PHLX Semiconductor (SOXX), an ETF that tracks the Philadelphia semiconductor index, was one of the best industry ETFs this morning before pulling back to a 0.2% gain.
Taiwan Semiconductor (TSM) beat profit expectations and gave the industry a positive vibe when CEO C.C. Wei said the industry bellwether is much more optimistic now. But Taiwan Semiconductor shares reversed lower, erasing an early gain of more than 2%.
In other major stock indexes, the S&P 500 rose 0.1% but had been up as much as 0.6%. It is still looking for its first close above the 3000 milestone since Sept. 19.
The Dow Jones Industrial Average lagged with a fractional loss. IBM (IBM) was the main drag on the industrials, after the computing giant missed Q3 sales expectations. Shares of Big Blue, which had been forming a cup-with-handle pattern, gapped down below the 50-day moving average in heavy volume.
Small caps led, as the Russell 2000 added 0.8% and traded above its 200-day moving average for the first time since Oct. 1. It hasn't closed above the 200-day line since then.
Volume was tracking higher on the Nasdaq and lower on the NYSE compared with the same time on Wednesday. Advancing stocks led decliners by nearly a 2-1 ratio on the NYSE and by 8-to-5 on the Nasdaq.
Since the stock market started rebounding two weeks ago, few quality stocks have broken out of bases. But the breakout drought seemed to be ending Thursday.
In the top-performing chip-equipment industry, Photronics (PLAB) broke out of a cup-with-handle base, topping an 11.55 buy point.
Crown Holdings (CCK) broke out of a flat base with a 68.94 buy point after the company reported earnings. Shares rallied even though adjusted EPS declined 9%, and the maker of aluminum cans and other packaging cut its full-year profit outlook.
Dover (DOV) jumped past the 101.48 buy point of a cup with handle. Volume was heavy. The company's third-quarter earnings were above views and management raised the bottom of its full-year profit forecast range, to $5.82-$5.85 on an adjusted basis.
WNS Holdings (WNS) broke out of a base, gapping past a 65.10 buy point in tremendous volume. The India-based business technology company beat earnings expectations and raised its full-year EPS forecast.
Juan Carlos Arancibia is the Markets Editor of IBD and oversees our market coverage. Follow him at @IBD_jarancibia
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