The Dow Jones Industrial Average closed off session highs as stocks faded late and ended mixed. A trio of Warren Buffett stocks are nearing buy points. Coinbase and Riot Blockchain rose as top crypto Bitcoin gained. Meanwhile, Microsoft fell after an analyst note.
There were breakouts aplenty despite the measured action. Skechers, Builders FirstSource and Tri Pointe Homes all tested entries.
Treasury yields moved higher. The 10-year yield rose 1 basis point to 3.43% while the two-year yield spiked 3 basis points to 4.03%, making the yield curve more inverted.
Nasdaq Lags As Small Caps Shine
The Nasdaq lagged the other major indexes and ended the session down 0.4%.
The benchmark S&P 500 slipped nominally but closed essentially flat. CarMax rocketed 9.6% on a Q4 earnings beat. It had its best gain since April 17, 2020, when it rose 10.4%, according to Dow Jones Market Data.
The S&P 500 sectors closed mostly positive. Financials, energy and materials were the top performers. Technology and communication services were the only areas in negative territory.
Small caps outperformed for a second day in a row, with the Russell 2000 rising 0.8%. Growth stocks were also excelling, with the Innovator IBD 50 ETF rising 0.8%.
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The Dow Jones index managed to close the day in positive territory. It rose 98 points, or 0.3%, after trimming gains.
Caterpillar performed well again, rising 2.4%. It is pulling away from its 200-day moving average.
Microsoft stock was the worst performer on the blue chip index. It fell 2.3% but remained above its key moving averages. It is trading above a 276.86 buy point, according to MarketSmith analysis.
The stock dipped after UBS trimmed estimates on its Azure cloud platform. The firm holds a neutral rating on MSFT with a 275 target.
"Based on our (approximately) 20 calls with AWS/Azure customers and partners, we conclude that customer efforts to optimize/trim their cloud spend will be deeper and last longer than most think," analyst Karl Keirstead said in a note to clients. "Relative to the consensus view that we're deep enough into these efforts such that the deceleration in cloud growth can begin moderating meaningfully as early as (Q2 of 2023), we conclude that such efforts will persist at a high level throughout 2023."
Warren Buffett Stocks Eye Entries
A trio of stocks owned by Warren Buffett-led Berkshire Hathaway are currently eying entries.
Insurance play Aon is getting close to a cup-with-handle entry of 328.43, MarketSmith analysis shows.
Aon's IBD Composite Rating comes in at 82 out of 99. Earnings are a key strength, with its EPS Rating a strong 88 out of 99.
Mastercard is forming a double-bottom base with an ideal entry point of 369.25. The stock cleared its 50-day moving average Tuesday, a bullish sign.
MA stock boasts an IBD Composite Rating of 93. Big Money has been buying the stock of late, with its Accumulation/Distribution Rating coming in at B.
Buffett is also a holder of Leaderboard Watchlist stock Floor & Decor, which currently sits near an entry of 102.71. Floor & Decor operates 191 warehouse-format stores and six design studios across 36 states. It holds an EPS Rating of 97 out of 99.
Berkshire is in the news after Buffett said he is adding to the company's Japan holdings. Berkshire has raised its stake in each of Japan's top five trading houses — Itochu, Mitsubishi, Mitsui, Sumitomo and Marubeni — to 7.4%.
The Buffett CEO, who some call the "Oracle of Omaha" said in an interview that additional investments in Japan are "always a matter of consideration."
Coinbase Stock, RIOT Jump As Bitcoin Gains
Crypto trading platform Coinbase gained amid another rise in Bitcoin prices.
COIN stock finished with a 6.1% lift but remained well below a cup-with-handle buy point of 85.48. It is now up about 109% so far this year.
Bitcoin, the most well-known cryptocurrency, rose 1.7% Tuesday. It is now up nearly 82% in 2023, an impressive run by anyone's standards.
Other digital currency plays also rose. The Grayscale Bitcoin Trust jumped 3.3%.
But it was Bitcoin mining play Riot Blockchain that impressed the most as it soared 17%, adding to Monday's 15.5% surge.
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Outside Dow Jones: Skechers Leads Breakouts
With the stock market in a confirmed uptrend it remains key to stay on top of breakouts.
Skechers is in a buy zone after clearing a cup-with-handle entry of 47.80. Volume was 46% above average.
Builders FirstSource is actionable after rising above a flat base buy point of 90.31. The relative strength line has moved to a fresh high. Volume was 60% above average. Ideally, volume should swell at least 40% on a breakout.
Earnings are a key strength for this building products play. It holds a near-perfect EPS Rating of 97.
Tri Pointe Homes was among the homebuilders that made bullish moves. It is in a buy zone above a flat base entry of 27.80. Volume was tracking well below average levels, however.
D.R. Horton was another strong performer from this industry group. So much so it was named IBD Stock Of The Day for Tuesday.
Please follow Michael Larkin on Twitter at @IBD_MLarkin for more analysis of growth stocks.
