Techs Spearhead Early Gains; Arm Clears Entry

Bulls ruled in first hour of trading Thursday with the Nasdaq composite leading the way, as the tech-heavy index got a big boost from Micron Technology (MU) and other semiconductor stocks. Meanwhile, small and midcap companies advanced bullishly on the stock market today.

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Blue Chips, Small Caps Lag In Mixed Session; META, KBH, ARM In Focus

Micron paved the way for spirited buying, as it soared more than 16% in recent action. The giant in memory chip and data storage technology issued a bullish revenue forecast that blew past analyst estimates.

Micron has plunged 46% from its June peak of 157.53. That is abnormal for most leading stocks that are correcting in price and building a new base. That said, recent action resembles a double bottom showing a buy point at 111.

Please keep in mind that this is a very aggressive entry for traders, although Micron has bullishly catapulted above the 50- and 200-day moving averages.

The 23 Relative Strength Rating for Micron is very weak. It should improve quickly. The three-month RS Rating is even worse at 12, according to MarketSurge. But this rating should rise fast too.

Stock Market Today: Nasdaq Pares Gains

While the Nasdaq was up as much as 1.3% at one point, the index surrendered some of those gains in recent action and was up 0.7%.

Chasing the Nasdaq higher was the S&P 500, up 0.4%. The Dow Jones Industrial Average also rose 0.5% on the back of strength among its tech, banking and industrial components. At least five of the 30 Dow Jones stocks gained 2 points or more.

Small caps still lag in terms of year-to-date performance. Nonetheless, the Russell 2000 advanced 1%.

Breadth was positive. On the MarketSurge homepage, 605 stocks moved higher in above-average volume while 134 fell in heavy turnover.

Going back to technology names, chip play Arm (ARM) also joined the breakout list. The major player in semiconductor designs rallied 3% and shoved past a 149.93 entry point in a cup with handle.

One risk? The high of the handle is still more than 15% below the cup’s left-side high. Generally, prefer stocks that form a handle when they are much closer to the cup’s left-side peak, ideally around 5% to 10%.

That said, the British company showed it is a true winner on the stock market today. Arm has tripled since it returned to the stock market with an initial public offering priced at $51 per share in September 2023.

Taking Flight Again

The Dow Jones transportation average, up 1.3%, got a fresh boost from news on Southwest Airlines (LUV). The major passenger carrier issued improved metrics in the current quarter, including higher than forecast revenue per available seat mile. Southwest also announced a stock buyback.

Southwest Air jumped 10% in volume that was running more than eight times its usual pace over the past 50 sessions. Trading near 31.35, the stock crossed a trendline entry near 31 as well as upside resistance near 30.50.

On the downside, Vista Energy (VIST) sold off hard for a second straight session. Shares in the oil explorer, which focuses on Mexico and Argentina, dropped more than 5% in heavy turnover early. Vista undercut the 50-day moving average, a no-no for stocks that have recently broken out.

Vista Energy, highlighted in the first half hour of Thursday’s IBD Live show, also dropped more than 7% below a recent buy point at 49.58. The golden rule of investing, keeping losses small, remains paramount even during a strong confirmed uptrend.

Beyond The Stock Market Today

The yield on the key U.S. Treasury 10-year bond edged up 1 basis point to 3.79% ahead of key U.S. inflation data hitting the news wires early Friday.

Crude oil futures on the NYMEX tanked. The December contract futures fell more than 3% to $67.56 a barrel.

Please follow Chung on X/Twitter: @saitochung and @IBD_DChung

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