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Dow Jones Stretches Gain To 2,392 Points From June 3 Low; This Blue-Chip Stock Breaks Out

DATE POSTED:July 11, 2019

The Dow Jones Industrial Average led the market upside, rising nearly 0.6% amid a continuing confirmed market uptrend in stocks today. Meanwhile, blue-chip health care stock Anthem staged a new breakout.

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A solid rebound by Boeing (BA) also helped the price-weighted Dow Jones.

Boeing stock, up more than 6 points or 1.8% to 358, is still working on a new base. The aerospace giant is trying to rebound back above its key 50-day moving average. With less than 45 minutes to go in the regular session, turnover is heating up, 7% above usual levels. The Dow Jones industrial component still trades more than 20% below the base's left-side peak.

When a stock bottoms out and then forms the right side of a solid chart pattern including the cup with handle or the double bottom, watch to see if it can rise to within 5% to 15% below the base's left-side price peak. At that point, a handle may form. This represents the final shakeout of weak holders before a potential rush of institutional share demand, creating a new rally in the stock.

Meanwhile, former Leaderboard stock winner Xilinx (XLNX) (97 Composite Rating according to IBD Stock Checkup), Warren Buffett-backed payment technology provider StoneCo (STNE) of Brazil (94 Composite), and security software firms Proofpoint (PFPT) (98) and Fortinet (FTNT) (93) are constructing the right side of new bases. In a healthy market uptrend, an increasing number of highly rated growth stocks should be able to complete a sound base and break out to new highs.

Consider this type of individual stock action to be the ultimate indicator of a bull market.

The Nasdaq composite trailed the Dow Jones, losing mild gains to trade nearly 0.2% lower around 3:15 p.m. ET. The S&P 500 edged up a couple points, less than 0.1%.

Volume is running mildly lower vs. the same time on Wednesday.

However, at the session high of 8226, the Nasdaq still holds a big lead over the Dow Jones industrials with a 23.9% year-to-date advance.

The Dow Jones, at the session high of 27,072, shows a 16% lift since Jan. 1.

Small caps are still underperforming. The Russell 2000 sank more than 0.6%. Yet not all small caps are doing badly.

Innovator IBD 50 (FFTY) at one point rose 0.5% to 35.59, extending its year-to-date gain to 28.9%. The ETF has risen in nine of the past 11 sessions. (See the IBD 50 stock list in its entirety.)

The top 10 stocks within the IBD 50 get special chart annotations on IBD Leaderboard to help readers quickly spot proper buy points, sell signals and other notable chart action.

Will This Blue Chip Lift The Dow Jones Further?

The 30-stock blue-chip index got a strong boost from one of its health care components, UnitedHealth (UNH), following news that the Trump administration is dropping a plan, for now, to stop drugmakers from paying rebates to pharmacy benefit managers. UnitedHealth raced more than 12 points higher, or nearly 6%. The megacap also crossed back above its long-term 200-day moving average in heavy volume, a bullish sign.

But UnitedHealth has yet to stage a breakout.

Its industry group peer, Anthem (ANTM), did just that. Shares gapped up at the open and gained more than 4%. Anthem stock hit a session high of 302.24 in volume running more than 40% above its 50-day average. That sent the stock rising roughly 2% past a 294.96 proper buy point in a cup with handle.

The 5% buy zone goes up to 309.71. Thus, the stock is in proper buy range.

A Strong EPS Rating For Anthem

A 91 Earnings Per Share Rating is quite impressive for Anthem, as it's part of a mature industry. Nonetheless, prospects for a future increase in the number of Americans getting health insurance perhaps serves as a new factor for the stock and its peers.

IBD research finds that all great stock market winners feature something new, the N in IBD's CAN SLIM seven-point paradigm for success in growth stocks. "New" can stand for new products, new management or new market conditions. New IPOs also tend to fit this requirement.

The Street sees Anthem profit growing 21% to $19.30 a share this year and 19% to $22.98 in 2020.

From 2010 to 2018, earnings have risen from $6.74 a share to $15.89, up 136%.

According to IBD Stock Checkup, the 76 Composite Rating for Anthem is not savory. One would prefer to see the rating at 90 or higher. It's being weighed in part by a mediocre Relative Strength Rating of 73 on a scale of 1 (the worst) to 99 (the best). Watch to see if the RS Rating improves.

On The Downside

Pharmacy automation tech firm Omnicell (OMCL) slid more than 14% in ten times its 50-day average volume and triggered a key sell signal by falling at least 8% below a buy point of 84.51 in an oddly shaped cup with handle. The base also featured a higher alternate entry point of 86.97.

The stock is trying to find institutional buying support at its 200-day line.

Omnicell fell on reports that a market research firm GlassHouse advised clients to short the stock due to allegations of accounting irregularities.

In Other Financial Markets

U.S. crude oil futures lost mild gains to slip 0.1% to $60.35 a barrel. Crude has vaulted 49% since Jan. 1.

The yield on the benchmark U.S. Treasury 10-year bond rose 3 basis points to 2.10%, 5 basis points below three-month T-bills at 2.15%.

Please follow Chung on Twitter at both @SaitoChung and @IBD_DChung for more on growth stocks, chart analysis, breakouts and sell signals.

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The post Dow Jones Stretches Gain To 2,392 Points From June 3 Low; This Blue-Chip Stock Breaks Out appeared first on Investor's Business Daily.