The Dow Jones Industrial Average fell more than 0.6% in afternoon trading in stocks today, despite more progress in the new breakout attempt by its tech component Apple (AAPL).
Meanwhile, the tech-centered Nasdaq composite kept its own losses moderate, losing less than 0.4% in a day that is showing a relatively mild trading range. The S&P 500 cooled 0.5%; IShares PHLX Semiconductor (SOXX) fell 1%
Apple at one point led the upside within the 30-stock Dow Jones, rising much more than 1.4% After clearing a new proper buy point of 197.79 in a large, deep cup with handle.
The Nasdaq 100, benefiting from strength in FANG stocks, also kept its loss at less than 0.1%.
When To Buy Apple Stock Today
The proper 5% buy zone for Apple? It goes up to 207.68. Buying stocks when they already leap 10%, 15% or more fit a proper entry can be highly risky for your portfolio. Such strong stocks can easily pull back and shake you out as certain classes of investors and traders sell on the breakout and the stock tests its pivot point. So, buying too high above the breakout point leaves you vulnerable to a quick loss in an otherwise good stock.
Following IBD rules when you sell, you should be forced to execute the golden rule of investment.
Volume in Apple is running sharply above its usual pace over the past 50 sessions, a good sign. Why? It denotes fresh demand for shares by institutional investors (think mutual funds, hedge funds, large investment advisors, insurers and the like).
Note that Apple still trades around 13% below an all-time high of 233.47. That price also serves as the left-hand side of the six-month cup base.
The typical cup with handle, as researched by IBD over decades of big stock market winners, is roughly 13 weeks or three months long. . That happens to be the amount of time between quarterly results issued on Wall Street. But a good cup with trade can also be as short as seven weeks or as long as a year, possibly even longer.
Go to MarketSmith and see a historical weekly chart of Cisco Systems (CSCO), the biggest growth stock of the 1990s, and you'll see it formed a giant cup with trade in the 1994-95 correction. It came to a smart breakout when the stock market turned higher in 1995. Power
Formerly on IBD leaderboard, security software innovator Zscaler (ZS) at one point rallied more than 2% to a session high of 65.63. The San Jose, Calif., Firm had cleared a 48.34 entry point in a cup without shopping Jan. 31 in double average volume, then gapped up on a bullish fiscal Q2 report (earnings of 9 cents a share, smashing estimates, revenue up 65% to $ 74.3 million, a quarterly best).
Zscaler entered the IBD Leaderboard Leaders Near A buy point list as a half-size position on March 1 when it opened the session at 57.49, then exited Leaderboard on April 4.
For now, the stock has yet to challenge support at its fast-rising 10-week moving average. The 10-week line is drawn in all IBD weekly charts and on MarketSmith.
Metals Stocks Rally Again
MarketSmith showed at least one stock making its breakout screen: Mesabi Trust (MSB) . Shares in the metal ores play more than 1% and cleared a 31.09 proper entry in a five-week flat base.
That flat base can be interpreted as a large handle on a big cup pattern. grown its earnings per share 494%, 242%, 15%, 41%, 35% and 27% vs. year-ago levels in the past six quarters on rapid increases in sales. IBD Stock Checkup provides the iron ore mining royalties of 96 Composite Rating on a scale of 1 (a bust) to 99 (the bomb).
One Trading Risk
The average daily volume in Mesabi? Very thin at just 74,000 shares.
Therefore, be careful in how you structure your position in thinly traded stocks. IBD tends to report on stocks with an average daily volume of 500,000 shares or more.
In stock, generally avoid accumulating shares that make up more than 5% of the stock's average daily turnover.
Crude oil prices cooled as near-term WTI futures backtracked 0.7% to $ 63.93 in barrel.
The spread between 3-month T-bills and 10-year US Treasury bonds are currently 10 basis points, up from 6 basis points on April 1.
Please follow Chung on Twitter at both @SaitoChung and @IBD_DChung for more on growth stocks and financial markets.
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