This post was originally published on this site
The stock market rally cooled off a bit as investors examined a President Trump plan to cut taxes. The Dow Jones industrial average, fresh from rising nearly 1.1% on both the first two days of the current trading week, sank 0.1% in late trading Wednesday. market today.
The Nasdaq composite, NYSE composite and S&P 500 also edged a tad lower. Volume was mildly higher on the NYSE vs. the same time Tuesday and slightly lower on the Nasdaq.
The 30-component Dow Jones industrial average, at 20,974, is now up 6.1% year to date. That trails the Nasdaq’s 12% gain, but is ahead of the Russell 2000, which rallied 0.6% late Wednesday but trails with a 4.5% gain since Jan. 1.
In the 30-stock Dow, at least three names gained 1 point or more, including Travelers (TRV) and United Technologies (UTX). The latter, up more than 8% past a 109.52 cup-with-handle breakout point, reported thin gains in Q1 earnings and revenue.
Go to a weekly chart of United Tech, and you’ll see that the stock can also be seen as still forming an aircraft carrier-sized saucer base stretching to its February 2015 peak of 124.45.
From that perspective, one could argue that another handle formed on this extremely long base with an additional buy point of 114.54, 10 cents above the March 1 intraday high.
United Tech CEO Gregory Hayes noted that all four main businesses saw top-line growth, driven by 3 percentage points of organic growth and 1 point of net acquisition growth, offset by a 1% drop related to currency flows. Otis brand elevator and related equipment orders rose 11% excluding China.
Amid the selling carnage seen in U.S. Steel (X) shares following its poor quarterly revenue, the steel sector actually does not look so bad when viewed through the prism of U.S. Steel’s more highly rated rivals, Nucor (NUE) and Steel Dynamics (STLD).
Both of these stocks rebounded sharply off intraday lows and kept their heads above the 50-day moving average. This is key, as IBD research of the best stock market winners over the past century shows that a true market leader trades above its 50-day and 200-day moving averages ahead of a possible breakout from a well-formed historical chart pattern, including the cup-with-handle, the double-bottom and the flat base.
Nucor, up 2% to 62.15, is less than 9% below a recent high of 68 and is building a new base. The RS Rating of 71 is below the ideal minimum of 80 on a scale of 1 to 99, but it’s moved up from 51 just two weeks ago.
Last week, Nucor posted a 304% leap in first-quarter earnings to $1.13 a share, its biggest year-over-year increase in more than four years, as revenue accelerated 30% higher to $4.82 billion. Nucor’s after-tax margin soared to 7.5% vs. 2.4% in the year-ago quarter.
Steel Dynamics on April 19 posted a fifth quarter in a row of excellent profit growth, with EPS rising 215% to 82 cents on a 36% gain on the top line to $2.37 billion. That was the highest quarterly sales since the fourth quarter of 2014.
Steel Dynamics is fashioning a new base that shows many jagged edges — one of the telltale signs of investing in commodity-linked companies. In many cases, the right time to buy such a stock is not at the primary breakout but possibly during the first pullback following the breakout.
Elsewhere in the market, keep an eye on top names in the gaming industry. IBD’s Leisure-Gaming group has trampolined up to 24th from 80th six weeks ago, as seen in IBD’s daily ranking of 197 industry groups based on six-month relative price performance.
Watch for Las Vegas Sands‘ (LVS) first-quarter results after the market close on Wednesday. The Street sees earnings rising 38% to 62 cents a share, which would be the best bottom-line result since a 78% jump in the third quarter of 2013.
The stock, up 1.5% on Wednesday in strong turnover, is fashioning the right side of a potential new saucer base with a 63.38 high. For now, the base shows a 63.48 entry.
Sands’ arch rival Wynn Resorts (WYNN) saw a 3.5% drop in Q1 revenue from its Macau-related business. That was offset by a 6% rise in revenue from its Las Vegas casino hotels.
Wynn shows a better RS Rating than Sands at 85 vs. 64, as seen in IBD Stock Checkup. Meanwhile, eight other companies in the gaming group boast an RS rating of 90 or higher and trade at least 10 a share. You can see the entire list of stocks in every industry group via IBD’s premium screening tool MarketSmith.
See the entire list of 197 industry groups by going to Data Tables in the Stock Lists section at Investors.com.