BIG GAINS IN AMAZON, INTEL, MICROSOFT, GOOGLE, AND FACEBOOK PUSH NASDAQ 100 TO NEW RECORD -- AMAZON'S 13% GAIN HELPS LEAD CONSUMER CYCLICALS TO UPSIDE BREAKOUT -- INTEL AND MICROSOFT LEAD TECHNOLOGY SECTOR HIGHER
NASDAQ 100 GAPS TO NEW RECORD ON FRIDAY... It started after the market closed on Thursday when a raft of big internet and technology stocks reported huge earnings which pushed their stock prices higher in after-market trading. It continued on Friday when those stocks scored explosive gains on strong volume. The Technology SPDR (XLK) surged 2.6% on Friday to a new record which solidified its role as the market's strongest sector for the year. Those gains were reflected in a 2.9% gain for the Nasdaq 100 which was the day's strongest index. Chart 1 shows the PowerShares QQQ gapping into record territory on strong volume. The black bars on top of Chart 1 plot a "ratio" of the QQQ divided by the S&P 500. After lagging behind the SPX over the past four months, the QQQ/SPX ratio climbed to the highest level since early September. The QQQ (which tracks the 100 largest non-financial stocks in the Nasdaq market) gained 1.7% for the week versus an SPX gain of 0.2%. The QQQ was led higher by big gains in Amazon (13%), Intel (7%), Microsoft (6%), Alphabet (4%), Facebook (4%), and Apple (3%). Several of those stocks hit new record highs.
(click to view a live version of this chart)
Chart 1
AMAZON EXPLODES TO A NEW RECORD... Amazon was the week's standout Nasdaq performer. The daily bars in Chart 2 shows Amazon.com (AMZN) gapping 13% higher on Friday on huge volume. That also pushed its relative strength ratio to a new record. The AMZN/SPX ratio (top of Chart 2) jumped to a new high on Friday, which reversed three months of weak relative performance. Although Amazon was the strongest percentage gainer in the QQQ, it isn't included in the technology sector. Amazon is the biggest stock in the Consumer Discretionary SPDR (XLY). Chart 3 shows the XLY also hitting a new high on Friday. It was the day's second strongest sector behind technology. Chalk that up to Friday's huge gain in Amazon.
(click to view a live version of this chart)
Chart 2
(click to view a live version of this chart)
Chart 3
FACEBOOK AND ALPHABET HIT NEW RECORDS... I've commented in previous articles about relative weakness in so-called FAANG stocks over the past few months. Not surprisingly, their relative performance took a sharp turn to the upside on Friday. We've already looked at Amazon's strong performance in Chart 1. Chart 4 shows Facebook (FB) jumping 4% on Friday to a new record (also in heavy trading). Its relative strength ratio (top of chart) is still below its early September peak, but appears to be rising again. Chart 5 shows Alphabet (GOOGL) gapping into record territory on Friday in heavy trading. Its relative strength ratio (top box) also appears to be turning higher after trading sideways for nearly two months. Netflix (not shown) hit a record high earlier in the month. That leaves only Apple to consider in the FAANG group. And it's looking stronger as well.
(click to view a live version of this chart)
Chart 4
(click to view a live version of this chart)
Chart 5
APPLE LOOKS A LOT STRONGER ... Apple is the market's biggest stock. That makes its trend very important. Not just to the technology sector, but to the entire market. Friday's strong chart action brought good news there as well. Chart 6 shows Apple (AAPL) jumping 3.5% (on rising volume) to the highest level in more than a month. That puts it in striking distance of a new record. The stock also climbed back above its 50-day average in very decisive fashion. The stock's overall uptrend was never in doubt, since it remained well above its 200-day moving average. But its "relative" performance was. The solid blue line in Chart 6 plots the APPLE/S&P 500 relative strength ratio. The declining ratio since early September made Apple a market laggard. The good news is that the ratio jumped on Friday to the highest level in a month. That's good news for Apple, the technology sector, and the entire stock market. For the record, the three biggest percentage gainers in the Dow on Friday were Intel, Microsoft, and Apple. Since the Dow is a price-weighted index, however, Apple's high price of 163 made it the day's strongest technology contributor.
