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Nasdaq Leads Stocks Up; Alphabet, Apple In Buy Range After New Breakouts | Stock News & Stock Market Analysis

FAANG stocks ruled the roost on Friday, helping hoist all of the major indexes higher as investors put aside worries about a lack of solidarity within the GOP and the White House and Spain’s decision to forcibly control Catalonia and focused instead on solid quarterly results.

Alphabet (GOOGL) soared after reporting strong Q3 results late Thursday, rising past a 1,006.29 buy point in a nearly 12-week flat base. The Google search engine operator gapped up at the open and rose as much as 7.3% at the session high. The buy zone goes up to 1,056.60.

The Nasdaq composite paced the gain, rising nearly 2.1% and on track for its biggest single-session gain since a 2.1% lift on June 28, 2016. That session served as the first day of a new market rally attempt; two days later on June 30, IBD changed the Market Pulse current outlook to “Confirmed uptrend” after the major indexes posted a rare Day 3 follow-through, signaling a new uptrend for stocks was potentially emerging.

As seen in IBD’s ETF Market Strategy tool, June 30 last year was a great time to begin looking for good stocks forming bases and setting up new breakouts, as well as buying shares in a broad-based ETF such as PowerShares QQQ Trust (QQQ), which tracks the Nasdaq 100.

QQQ on Friday rose 4.13, or 2.8%, to 151.09, in volume that is running more than double its 50-day average. QQQ is now up 40.4% since IBD’s Big Picture column noted the new buy signal.

The S&P 500 rose 0.8% while the Dow Jones industrial average lagged with a less than 0.2% gain. Breadth improved; on the NYSE, winners outmatched losers by a nearly 17-11 ratio.

Volume is running more than 20% higher vs. the same time Thursday on the Nasdaq and roughly 5% higher on the NYSE.


IBD’s TAKE: Leaderboard provides a special annotated chart of the Nasdaq composite in which market writers note the right time to buy a broadly diversified ETF, when to sell half of the position, and when to go 100% cash. You can see the chart by going to “The Big Picture” on the home page, then click on IBD’s ETF Market Strategy.


Apple (AAPL), meanwhile, furnished a new buy point after completing a shallow eight-week cup with handle. Shares rallied 3% to 162.58, surpassing a 160.97 buy point.

Get the correct entry on a good cup with handle by adding 10 cents to highest intraday price within the handle, or in this case 160.87.

Apple also rallied back above the 50-day moving average, a positive sign. The iPhone giant is also nearly 4% past a second-stage flat-base breakout at 156.75. The megacap tech rallied past that entry on Aug. 2 and hit new highs before pulling back.

Apple has rallied more than 39% since it broke out of an initial cup with handle on Jan. 6-9 at 118.12.

Fiscal Q4 results are due Thursday after the close. The Street expects Q4 earnings to rise 12% to $1.87 a share, extending a streak of low double-digit EPS growth to a third quarter. After that, growth is expected to accelerate; fiscal year 2018 profit is expected to rise 24% to $11.15 a share.

Apple’s IBD ratings have improved since the start of the year.

On Jan. 1, the iPhone and iPad giant showed a lousy Earnings Per Share Rating of 45 and a Relative Price Strength Rating of 59. Today, they’ve risen to 85 and 77, respectively, on a scale of 1 to 99.

Apple’s example in 2017 is a good lesson in how a stock chart can help an investor spot an excellent turnaround situation. Four quarters ago, the company posted a 15% drop in Q4 earnings per share and a 9% slump in revenue (its third straight year-over-year drop). With such results, and a lagging stock price, no wonder Apple’s IBD ratings plunged into mediocrity.

However, under the leadership of CEO Tim Cook, the company continues to create innovative and popular new products. The company also has set a goal of doubling its services-related revenue by decade’s end.

Sales have risen 3%, 5% and 7% in the past three quarters. The Street sees Q4 sales rising 8%, to $50.79 billion, continuing a slow-yet-steady acceleration in top-line growth.

Fiscal year 2018, which ends in September next year, could be even better. Apple’s revenue is seen increasing 17% to $266.6 billion, up from an expected 5% gain in the just-ended fiscal year 2017.

A 3% rise in U.S. gross domestic product in the third quarter, surging past the Econoday forecast for a 2.5% increase, also helped boost investor appetite for equities. The GDP price index, meanwhile, rose 2.2% vs. the prior quarter, which meets the Federal Reserve’s target inflation rate of 2%.

Selling in government bonds continued. The yield on the benchmark U.S. 10-year Treasury bond inched up to 2.43%, getting ever closer to this year’s high of 2.62%. The CME Group reports

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