Bulls came off the sidelines Tuesday morning, lifting the stock market to solid gains. News that an agreement to avoid a second government shutdown had been reached Monday night between House and Senate negotiators appeared to drive the optimism.
However, President Trump has yet to weigh in on the compromise.
The Nasdaq spurted ahead 1.4% in late morning trade, while the Dow Jones Industrial Average popped 1.3%. Large caps in the S&P 500 added 1.2%. Small caps in the Russell 2000 gained 1.3%.
Volume grew on both major exchanges vs. the same time Monday. The increase in volume suggested funds were actively buying. Trade declined Friday and Monday.
Lululemon Breaks Out
Among top-rated stocks, Lululemon Athletica (LULU) stabbed about 4% higher in strong volume. The retail apparel chain cleared a 152.28 buy point in a cup-with-handle base. The stock’s 5% buy zone extends to 159.89.
As seen in an annotated Leaderboard chart, Lululemon started forming its perfect downward-sloping handle on Jan. 18. Therefore, the intraday high on that session, 152.18, plus a dime, determines the proper buy point. Volume dried up as the handle formed, a good sign. It means that only a few holders were determined to sell.
Lululemon’s base is 33% deep, perhaps a bit more than bulls would prefer. The stock also spent a lot of time trading below the 10-week moving average. However, the stock is working on its seventh weekly close above the line.
Under Armour suffered earnings declines in 2016-17. The company reported Q4 and full-year 2018 results this morning. Under Armour beat on earnings and revenue.
Techs Boost Stock Market
Within the technology space, chip stocks were doing well. The Philadelphia Semiconductor Index gapped up about 2%. Sox member Xilinx (XLNX) climbed 1.6%. The chip designer is up 22% from a 95.28 buy point, which triggers a profit-taking rule. After a stock reaches 20% to 25% above a valid buy point, a consolidation often follows.
Xilinx is a member of IBD Leaderboard.
Many semiconductor stocks are not far enough along in their base building to be a buy candidate. For example, Intel (INTC) advanced about 2.5%, retaking its 200-day line in soft trade. But the stock needs to do more work on the right side of its pattern.
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