Stock Market Mixed as Apple Earnings, Fed Meeting In Focus; Shutterfly Gaps Up – Investor's Business Daily

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Shares of Apple stock and the Fed meeting were focal points for the stock market Wednesday. But strong earnings from Apple didn’t help the Nasdaq composite much. The Nasdaq, S&P 500 and Dow were mixed and mostly unchanged in morning trade.

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The Dow and S&P 500 are holding just above their 200-day moving averages, while the Nasdaq composite on Tuesday marked its eighth straight close below the 50-day line.

Apple (AAPL) shares jumped 4% to 176.06 after reporting strong earnings late Tuesday. The stock gapped bullishly above the 50-day moving average. Its April 17 high of 178.94 is a potential resistance level to watch.

Apple was one of the top gainers in the Nasdaq 100, along with Automatic Data Processing (ADP), which also gapped up on earnings. Shares were up more than 2% near midday.

Fed Meeting Looms Large

The Fed decision on interest rates is due at 2 p.m. ET. The Federal Open Market Committee is expected to leave the federal funds rate unchanged at 1.5% to 1.75%. But a quarter-point hike is expected at the June meeting.

The stock market is often volatile during the final two hours of trading after a Fed statement. With the market uptrend under pressure, a hawkish tone probably won’t help matters. But a dovish tone could spur some buying.

Centene Reclaims Buy Point

Among the day’s movers, Centene (CNC) made a nice move on earnings. Shares rose nearly 4% to 112.96. It’s back in buy range after reclaiming a 109.23 buy point.

Two Stocks Gap Up On Earnings

Elsewhere, Shutterfly (SFLY) gapped up powerfully on strong earnings. When a stock gaps up in price, it’s OK to buy as close to the open price (90.75) as possible. Keep in mind that it’s generally a difficult environment for new buys with the market uptrend under pressure.

When shares were trading around 81.50 Tuesday, a monthly call option for Shutterfly with an 82.50 strike price (May 18 expiration) came with a premium of around $5.05. This presented a trade with elevated downside risk of 4.5% ($5.05/81.50).

The trade still worked out as shares were recently trading around 92.50. Every week, the Earnings Preview column highlights firms with bullish charts that could be candidates for bullish call-option trades.

In the enterprise software space, Ultimate Software (ULTI) also gapped up on strong earnings. It cleared an aggressive entry at 253.07.

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