Apple, Banks Rise; Tilray Stock Shows Topping Sign

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Money center and superregional banks Thursday helped stoke a broad-based rally on Wall Street. The newest hot story in stocks today, Tilray, sold off hard after showing climax-run-type action in the prior three trading sessions. It also marked its biggest single-session point drop since going public July 19 at $17 a share.




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Meanwhile, business software and e-commerce firms showed resilience after selling off hard Wednesday. True market leaders Grubhub (GRUB), Adobe Systems (ADBE) and Salesforce.com (CRM) all gained 1% or more.

The Nasdaq composite rose nearly 0.9% and is on course to rise for a second straight week. Last week, the leading index for top growth companies gained 1.4%. The Dow Jones industrial average gained nearly 1%, the S&P 500 around 0.8%, and the S&P SmallCap 600 0.6%. The 600 on Wednesday came close to testing institutional buying support at the 50-day moving average.

Volume is running mildly higher vs. the same time Wednesday on both main exchanges.

Apple Stock Today

The Nasdaq 100 rallied 1% as Apple (AAPL) advanced for a third straight session with a 1.2% lift.

At 221.15, the iPhone, Apple Watch, HomePod and digital services company is now up more than 30% since Jan. 1. Shares have also gained as much as 28% past a 179.04 correct buy point in a perfect seven-week double bottom.

The double bottom features two distinct sell-offs, and the second drop should exceed the low of the first drop.

That was certainly the case for Apple; the second low of 160.63 (on April 27) not only undercut the first low of 164.47 (on April 2), but it also punctured the 200-day moving average (see the line drawn in black in every MarketSmith chart). Such a shakeout is actually a good thing. Why? It shakes out uncommitted holders and helps set up a potential new breakout.

Apple staged that breakout on May 4, roaring past the buy point of 179.04 — 10 cents above the middle peak of 178.94 in between the two sell-offs within the base.

Earnings estimates continue to rise for Apple. The Street sees profit rising 34% to $2.77 a share in the September-ending fiscal fourth quarter and up 28% for FY 2018 to $11.77 a share.

The Innovator IBD 50 (FFTY) exchange traded fund lagged, rising just 0.4%.

Banks Advance Again

Citigroup (C), Bank of America (BAC) and Dow industrials component JPMorgan Chase (JPM) gained 1% each. All three are seeing higher-than-usual turnover. The former two are forming bases.

JPMorgan poked above a 118.39 buy point in a long saucer with handle. The same base could also be seen as a flat base that’s nestled within a longer consolidation.

The Wall Street bank continues to show an impressive earnings trajectory. In 2009, JPMorgan earned $2.71 a share. This year, analysts seen profits growing 34% to $9.18 a share and up 9% to $10 a share in 2019.

Morgan Stanley (MS), Wells Fargo (WFC) and Goldman Sachs (GS) also advanced, but these three companies are laggards within their respective industry groups. All three trade below their long-term 200-day moving averages.

Silicon Valley financier SVB Financial (SIVB) rallied more than 2% to 326.80. Notice on a daily chart how the large-cap banking play has repeated been turned lower near 333.

Tilray Stock Today

On the downside, Tilray (TLRY) fell more than 20% and reached as low as 158. That’s a 47.3% correction from the stock’s high of 300 in less than 24 hours.

The recent big gain was vertical in slope, commensurate with a climax run that occurred in many of the dot-com leaders in the late 1990s to early 2000.

CEO Brendan Kennedy, a graduate of University of California at Berkeley and Yale’s business school, told Jim Cramer in a Tuesday “Mad Money” cable TV interview that he foresees a $100 billion global market for cannabis in the next several years.

Tilray Business Strategy

Tilray aims to build partnerships with major pharmaceutical and consumer goods firms to develop cannabis-based products.

The Nanaimo, British Columbia-based company has grown sales from $5.4 million in 2015 to $20 million last year. In the second quarter, Tilray grew revenue 95% vs. a year ago to $9.7 million, the highest for any quarter. It lost 14 cents a share. The Street sees the large-cap company (now with a market value of around $16.5 billion) losing 45 cents a share.

Please follow Saito-Chung on Twitter at @IBD_DChung for more on growth stocks, chart analysis, sell rules, and financial markets.

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2018-09-20 10:34:00

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