Stocks rose in late morning trade, taking back some of Tuesday's stiff losses, as the largest company on the Nasdaq staged its first breakout in more than a year.
Apple (AAPL) jumped for a third straight session, rising nearly 4% to 112.16 and moving past a 110.33 buy point on a bottoming base structure. The 5% chase zone extends to 115.85.
One can see the latest base as a five-month cup with handle, with the proper buy point at 10 cents above the handle's intraday high of 110.23, or a large double-bottom base with the same downward-slanting handle.
Apple scores a weak 40 Composite Rating from IBD Stock Checkup, underscoring the company's current status as a corporate turnaround following two straight disappointing quarters on both the top and bottom lines.
The Nasdaq composite rose 0.7%, gaining more than half of Tuesday's 1.1% decline. The S&P 500 advanced 0.3% and the Dow Jones industrials both inched higher by 0.2%. Small caps pretty much moved in line with their big-cap brethren, with the Russell 2000 up 0.2%. It got slammed 1.9% on Tuesday and closed below its 50-day moving average for the first time since late June -- the time when IBD noted a rare Day 3 follow-through on June 30, which signaled the start of a potential new uptrend.
The market today, as seen in IBD's Big Picture, has downshifted into "Uptrend under pressure," which means that there's higher risk in buying growth stocks.
Keep in mind that it's rare for a stock to lead in more than one bull market. In Apple's case, the stock first launched a fivefold run after clearing a large base-on-base structure near 21 (adjusted for a 7-for-1 split in June 2014) in June 2009, just three months into the new bull market.
Apple shares peaked at 100.75 in September 2012, carved a deep, long cup-style base, then broke out again in the spring of 2014 en route to new highs.
The construction and mining gear giant formed a sloppy cup with handle from April 20 to July 11, and a day later on July 12, shares catapulted past a 78.80 handle buy point. The stock rose as much as 7% before pulling back. Watch to see if the 80 price level, formerly an area of upside resistance, offers a floor of support.
Elsewhere in the stock market today, Macy's (M) rose 2%, courtesy of an analyst upgrade from Citigroup citing improving cash flow and a stout dividend yield, which is 4.4% -- more than double the S&P 500's 2% payout. The department store chain is still swimming below its 50- and 200-day moving averages. Healthy growth stocks trade above both these technical support levels.
In the IBD 50, No. 1-ranked NetEase (NTES), the Chinese online video game giant that is reportedly planning to sell its news division, advanced more than more than 4% to keep its sharp uptrend intact. The stock, a big winner following the 2000-2002 tech bear market, has rallied as much as 34% past a 179.20 cup-with-handle pivot point. NetEase entered IBD Leaderboard on June 29 when the stock traded near 181. It's since triggered the "platinum" sell rule in which you sell at least some shares in strong growth stocks once they've risen 20% to 25% past a proper buy point.
RELATED:
