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XAutoplay: On | Off The major indexes retreated to session lows in early afternoon action as energy stocks tumbled with oil prices. Meanwhile, investors digested some key quarterly results from tech giants over the past few days, with the key monthly payrolls report on tap Friday.
The Nasdaq and S&P 500 slid 0.2%. The Dow Jones industrial average, up more than 2.4% over the prior two weeks, gave up 0.4%. Dow components Exxon Mobil (XOM) fell 1.3% and Chevron (CVX) 2.1% as U.S. crude futures fell 4% to $45.90 a barrel, their lowest readings since last November.
The Russell 2000 sank 0.5% lower. Meanwhile, on the other side of the pond, major European bourses enjoyed solid advances; the CAC 40 jumped more than 1.3% while the Dax 100 of Germany added nearly 1%.
Among other indexes, the Dow utility average edged up 0.1% after underperforming the major averages on Wednesday, losing almost 0.6%.
From the birdseye view of IBD’s 197 industry groups and subgroups, oil drilling led the downside with a 4.3% loss, followed by Canadian oil exploration (-4.1%), U.S. oil exploration (-4%), international oil exploration (-3.6%) and oil machinery (-3.6%).
Oil and gas transport firms were not spared either, with the group getting trounced 3.4%. Oneok (OKE), a star performer in the Income Investor screen in 2016, took out its 200-day moving average in heavy volume as shares dove 5% to 49.53.
The Tulsa, Okla.-based pipeline giant showed uncharacteristically wild action since a bad reversal on Feb. 1, causing the stock to spend more time below its 50-day moving average — a key defensive sell signal. Oneok has also round-tripped its gains from a late-November breakout past a 51.82 buy point in a giant bottoming base. (Please see a long-term weekly chart at Marketsmith to fully view the deep first-stage cup with handle.)
Apple (AAPL), one of the Dow Jones industrials’ 30 components, continued to show a mild yet manageable decline after Wednesday’s nice bounce off its intraday lows. The stock eased 0.8% to 145.90 in volume that is running above normal pace.
Because the iPhone giant has now achieved a 25% gain from a Jan. 6-9 breakout from a cup-with-handle base at 118.12, an investor would be fully justified in taking the profit.
However, with strong anticipation for the next iPhone series, a rising dividend, and CEO Tim Cook’s intention to double service-related revenue within a few more years, an investor also has good reasons to build conviction and watch if the stock has more room to grow. But a report says iPhone sales are weakening in China.
No defensive sell signals have been triggered recently.
As seen in IBD Stock Checkup, Apple gets a solid 91 Composite Rating, a far cry from the low 60s to 70s several months back. The Composite Rating melds together IBD’s most important measures of profit and sales growth, profit margins, return on equity, stock price strength, industry group strength, and other factors.
The RS Rating has also vastly improved to a 90, meaning on a 12-month basis, Apple now beats 90% of all public companies in IBD’s database.
Snap (SNAP), meanwhile, continues to do constructive work on the right side of its base. The Snapchat operator rose 3.8% to 22.64, good for a five-week high.
Watch to see if the new social media play on Wall Street can show more strength and possibly take out the 24.40 near-term high. However, that is not a proper buy point for now. Snap also has not formed a proper double bottom; the 19.73 low seen last month did not undercut the 18.90 low set on March 17.
Snap’s Relative Price Strength rating is irrelevant, since it lacks 12 months’ worth of stock action. However, the up/down volume ratio is positive at 1.4, as seen in IBD Stock Checkup (go to the supply and demand section of this valuable timesaving tool). Keep in mind that the up/down volume ratio works best when there are at least 50 days’ worth of daily price and volume action.
Snap, which reports Q1 results after the close on May 10, is still 22% below its 29.44 peak.
Some banks also worthy of watching include Comerica (CMA) and East West Bancorp (EWBC). But Western Alliance Bancorp (WAL) continues to struggle as the stock, down 1 cent to 48.58, is still feeling selling heat near the 50-day moving average.
Notice how the 50-day line, painted in red on an IBD or MarketSmith chart, has been sloping lower for at least four weeks.