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Stocks Up, But Small Caps Down; 3 New Reasons Apple Can Rally 20% | Stock News & Stock Market Analysis

Apple (AAPL) led a charge among tech stocks and drove the Nasdaq composite to a healthy gain of 0.7% in late-afternoon trading Friday.

XAutoplay: On | OffYet the stock market was somewhat mixed, as the Dow Jones industrial average was barely higher after being up only 0.2% at session highs. IBM (IBM), a longtime market laggard, is among four names down at least 1 point or more within the 30-stock Dow Jones industrial average.

The S&P 500 gained 0.3% but the Russell 2000 was virtually flat. The S&P SmallCap 600 sank 0.6% as a wide array of stocks in the tech services, retail internet, hospital, TV and radio, dairy products and electronics-related industry groups fell at least 1% or more.

Gold miners were also down sharply following a dip in precious metals.

Apple extended its gain from its newest buy point of 160.97 by gapping up at the open and rising more than 2% to 172.80 in heavy turnover. The proper buy zone from this new correct entry goes up to 169.02, so the iPhone giant is now extended in price.

One reason why longer-term holders can sit and watch to see if Apple can rally another 20% from its latest entry is the fact that despite a temporary pullback in late September, the stock did not trigger any IBD sell rules. For instance, it did not fall 7%-8% below a prior flat-base buy point of 156.75. This is the golden rule of investing.

Two more reasons to keep holding:

One, growth is accelerating, and CFO Luca Maestri made it 100% clear in Thursday’s news release: “Apple’s year-over-year revenue growth rate accelerated for the fourth consecutive quarter and drove EPS growth of 24% in the September quarter,” he said.

IBD’s Stock Market Today columns, since November of last year, have frequently noted that the prospects of a re-acceleration in top- and bottom-line growth in the consumer electronics and digital services giant was very good.

Apple’s revenue jumped 12% to $52.58 billion, up from gains of 3%, 5% and 7% in the prior three quarters. After-tax margin boosted 120 basis points higher to 20.4%.

Two, some highly rated mutual funds are establishing new positions in Apple, including at least four funds with an A or A+ for 36-month performance by IBD, as of the second quarter of this year. Strong institutional buying is critical to a stock’s long-term rise.

Apple’s Composite Rating continues to improve on Stock Checkup, now at 80 on a scale of 1 to 99.

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