The coronavirus stock market rally showed resilience again Friday with another bullish performance. Dow Jones stock UnitedHealth Group (UNH) was off highs after breaking out over a trend line. It’s still below a 304.10 buy point.
Meanwhile, large-cap semiconductor stocks fell sharply in the Nasdaq 100 after the Trump administration threatened to block shipments of semiconductors to China-based Huawei Technologies. Applied Materials (AMAT), Analog Devices (ADI), ASML (ASML), Lam Research (LRCX) and Qualcomm (QCOM) showed losses of more than 3%.
Wall Street initially liked the look of Applied Materials’ earnings report late Thursday, but the stock continues to get resistance at the 200-day moving average.
Speculative biotech Sorrento Therapeutics (SRNE) soared more than 150% to 6.75 after the company claimed its experimental coronavirus treatment is a cure for Covid-19.
With about one hour left to go in the session, the Dow Jones industrials were up a fraction, the S&P 500 was flat and the Nasdaq was 0.3% higher.
Despite recent volatility, the stock market remains in a confirmed uptrend since the S&P 500’s April 2 follow-through day. As noted in Wednesday’s The Big Picture, despite three distribution days now for the S&P 500, leading growth stocks continue to hold their own, with sell signals few and far between. What’s difficult now is finding stocks near buy points.
In the semiconductor sector, Advanced Micro Devices (AMD) is still working on a cup with handle, but price action has been sluggish of late. Nonetheless, a 58.73 buy point is still in play.
Dow Jones Movers
Home Depot‘s (HD) daily chart shows a May 5 breakout from a cup-with-handle base with a 224.32 buy point. The retailer extended gains Friday, rising 2.8%. Home Depot reports earnings next week, along with several other retail stocks including Lowe’s Companies (LOW), Dow Jones stock Walmart (WMT) and Target (TGT).
Outside of the Dow Jones, the MarketSmith Growth 250 yielded three big software winners: Datadog (DDOG), RingCentral (RNG) and Atlassian (TEAM). Gains ranged from 5% to 6%. Atlassian is a Leaderboard stock. Citigroup initiated coverage on Atlassian with a buy rating and 252 price target.
Innovator IBD 50 (FFTY) ETF, which tracks the performance of growth stocks in the IBD 50 index, jumped 1.5%, helped by strong showings from Zynex (ZYXI), Etsy (ETSY), PetMed Express (PETS) and Fortinet (FTNT). But in this group, the only stock that’s actionable is PetMed Express, which is finding support at its 50-day moving average for the first time after a breakout from a base.
In other stock market news, video game publisher Take-Two Interactive (TTWO) is vying for a breakout from a long consolidation ahead of next week’s earnings report. A daily chart shows a 124 cup-with-handle entry. Due to its technical health, Take-Two stock was featured in the latest Earnings Preview story as a possible earnings options trade.
In economic news, April retail sales plunged 16.4%, nearly double March’s revised decline of 8.3%. Wall Street expected sales to fall 11.2% overall. Sales slid 17.2% excluding autos, well below forecasts of an 8.6% drop. Despite the weak data, SPDR S&P Retail (XRT) ETF jumped more than 2.5%.
Lululemon Athletica (LULU) is a top-rated stock in the retail sector. Lululemon stock is still in the 5% buy zone after a breakout over a 237.59 entry.
Separately, the Empire State manufacturing survey index rose to -48.5 from a record low -78.2 in April, beating estimates of -60. Among firms surveyed, 14.5% saw business conditions improve vs. 7% in April. Meanwhile, 63.1% saw conditions deteriorate, vs. 85.2% the prior month.
Follow Ken Shreve on Twitter @IBD_KShreve for more stock market analysis and insight.
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