APPLE, AMAZON, AND FACEBOOK HAVE BIG DAY FOLLOWING STRONG EARNINGS -- MAJOR STOCK INDEXES MAINTAIN UPTRENDS -- EXPD AND UPS DELIVER NEW RECORDS -- DOW TRANSPORTS CONTINUE TO GAIN GROUND
THREE BIG TECHS LEAD FRIDAY REBOUND... Going into Thursday evening, most of the TV stock market commentary centered around the big tech stocks that were announcing quarterly earnings after the close. The consensus seemed to be that the big tech stocks had already seen huge gains for the year, and would need especially strong earnings to continue their climb. And they delivered. Amazon, Apple, and Facebook delivered surprisingly strong quarterly sales and profit for the last quarter that exceeded expectation by a wide margin. As a result, all three stocks jumped sharply on Friday and led the rest of the market higher. Chart 1 shows Apple (AAPL) surging 10% on Friday to reach a new record. Chart 2 shows Facebook (FB) jumping 8% to a new record as well. While Chart 3 shows Amazon.com (AMZN) ending 3.7% after giving up some earlier gains. Those three stocks also helped make technology (Apple), communication services (Facebook), and consumer cyclicals (Amazon.com) the day's three strongest sectors. Gains in the rest of market, however, were not as impressive.
FIVE SECTORS END FRIDAY IN THE RED... Of the eight other market sectors, three saw modest gains (utilities, materials, and financials); while five ended in the red (healthcare, energy, industrials, real esate, and staples). In other words, the rest of the marked did very little on Friday while tech stocks rallied. Even with that thin recovery, major stock indexes did end the week enough in the black to sustain their chart uptrends.
STOCK INDEXES REMAIN IN UPTRENDS... The tech-driven Nasdaq market remains the strongest of the three major stock indexes. Chart 4 shows the Nasdaq Composite Index gaining 1.4% on Friday to keep its uptrend intact. The prior week's pullback bounced off its early July low (see circles); while this week's gain of 3.6% moved it closer to its July high. The Nasdaq gained 6.8% for the month. Chart 5 show the S&P 500 ending Friday .7% higher to keep its July uptrend intact. The SPX gained 1.7% for the week; and 5.5% for the month. It also remains above its June intra-day peak at 3233. Chart 6 shows the Dow Industrials gaining 114 points (.4%) on Friday, although it lost -.16% for the week. It also gained only 2.3% for the month making it the weakest of the three major indexes. The good news, however, is that the Dow bounced off its 50- and 200-day moving averages on Friday to keep its summer uptrend intact. All three indexes also saw rising volume on Friday which is an encouraging sign.
DELIVERY RECORDS... My Wednesday afternoon message showed a point & figure version of two delivery service stocks that were either hitting a new record, or nearing one. The weekly bars in Chart 7 show Expeditors Intl. of Washington (EXPD) surging more than 5% for the week to reach a record. The weekly bars in Chart 8 show United Parcel Service (UPS) exploding 20% higher to also reach record territory by a wide margin. UPS reported on Wednesday evening a record 21% rise in shipping volume in its most recent quarter; and hinted at higher shipping rates to come which would boost its bottom line even further. Someone must have seen that coming. The stock had already reached a two-year high on Wednesday before the report; and exploded higher on Thursday the day after the report. Delivery stocks and truckers boosted the Dow Transports which continue to move higher.
DOW TRANSPORTS CONTINUE TO CLIMB...The Dow Transports continue to move quietly higher. The daily bars in Chart 9 show the Dow Jones Transportation Average climbing .8% on Friday and continuing to find support along its 200-day moving average (red arrow). My last two messages on the transports pointed out that their relatively modest gains as a group were masking much stronger gains in truckers and delivery service stocks (and rails to a lesser extent). That's largely due to continuing weakess in airline stocks which are holding the transports back. Even with that hindrance, it is encouraging to see the more economically-sensitive transportation group making some upside progress. Recent strong upside moves in truckers and delivery service stocks (like the two shown above) also show why it's always good to look beneath the surface in any market group to find individual stock winners. For the record, the Dow Transports gained 2.7% for the week to beat both the Dow Industrials and S&P 500; and +8.9% for the month which beat even the Nasdaq market. The two delivery stocks shown above had something to do with that. Along with truckers C.H. Robinson and Landstar which also touched new records this past week.
