Investors pared losses to a minimum Thursday, as the three major indexes ended up nearly break-even at the market close. Financial, retail and technology stocks led an initial downside following three straight Nasdaq and S&P 500 up sessions, then steadied themselves. Along the way, bargain hunters emerged in the small-cap area of the stock market today.
The Nasdaq composite wavered between positive and negative territory before finishing the day off marginally — down slightly less than 11 points, well short of a 0.1% dip. It managed to remain above the 20,000 mark. The S&P 500 also edged a hair lower, slightly more than two points, amid narrow rangebound trading.
The Dow Jones Industrial Average eked out a meager gain of less than 29 points and extended its win streak to five sessions. Two components rallied one point or more: Honeywell and UnitedHealth. UnitedHealth is a member of IBD Long-Term Leaders.
Honeywell, the diversified industrial giant, up 1.6% for the week, is fashioning a base-on-base pattern that displays a 242.77 proper buy point.
Volume has grown on both main exchanges compared with Tuesday's half-day session. After Thursday, just three trading sessions remain in 2024.
Also, the Russell 2000 turned more than 0.9% higher, a bullish move as the small-cap gauge swiftly wiped away mild early losses of nearly 0.9%.
Notice on a daily chart, however, how the Russell still trades well below its 50-day moving average, which had been climbing fiercely since late October but has recently slowed its ascent.
Long-Term Leaders: Will UnitedHealth Remain In The List?
3:30 p.m. ET
SoundHound Stands Out
One of the notable players Thursday was SoundHound AI, where aggressive traders piled into the stock and pushed it to new highs. A major player in sound-based artificial intelligence technologies for corporate customers, the midcap growth stock roared in festive volume and touched a session high of 24.98.
Shares have tripled since bullishly shoving past resistance at 6.45 amid a long base in November. SoundHound AI is supremely extended from any IBD-style buy point. At any point, shares could dive quickly after turning its ascent practically vertical in slope.
The Santa Clara, Calif., firm has not yet posted a profit, either on an annual basis on a quarterly one. In 2023, the net loss shrank to 29 cents a share vs. a net loss of 59 cents a year earlier. This year, the net loss is expected to reduce even more, to 25 cents a share. In the meantime, revenue has grown at a very rapid clip, up 81% in the fourth quarter of 2023 and up 73%, 54% and 89% during the first three quarters of this year.
Total revenue over the past four quarters topped $67 million. According to FactSet estimates on MarketSurge, revenue is seen rising 97% in the current quarter to $33.7 million, then climb in 196% in Q1 of 2025, 179% in Q2 and 70% in Q3. The next four quarters of revenue are expected to total $148.3 million.
Long-term debt to equity in 203 was very high at 299%. Nonetheless, mutual fund sponsorship has grown from 137 funds at the end of 2023 to 169 in Q3 this year.
Watch This Blue Dot
In the meantime, keep an eye on these three leaders in the stock market today: Adtalem Global Education, Ralph Lauren and cybersecurity group leader Fortinet. Why?
All three companies recently got flagged by the RS line blue dot screen in MarketSurge.
When a stock's relative strength line marks a new high, it gets a "blue dot" alert on the MarketSurge research platform. The blue dot signifies a stock is outperforming the S&P 500 in a truly meaningful way.
The biggest stock market winners tend to already outperform the major indexes before breaking out and going on spectacular runs, enriching chart-reading investors.
Adtalem, up 1.2% on Thursday, is building a flat base with a 92.93 buy point. Shares have risen more than 20% since clearing a trendline entry near 76.50 on Oct. 30, when it reported fiscal first-quarter results.
Earnings at the provider of post-secondary education both in the U.S. and overseas have grown 5%, 33%, 33% and 39% vs. year-ago levels in the past four quarters. Wall Street sees the bottom line rising 18% to $5.89 a share in the fiscal year ending in June 2025.
On Jan. 30, Adtalem plunged more than 18% after reporting results that failed to impress Wall Street. Earnings rose 5% in the December-ended fiscal second quarter vs. year-ago levels to $1.23 a share. That marked a smaller increase than the 8% gain in revenue to $393.2 million.
Yet since then, the Chicago-based firm has delivered more robust growth. Earnings pulled up 33%, 33% and 39% in the past three quarters while revenue picked up 12%, 12% and 13%, respectively.
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1:29 p.m. ET
Where Boeing Stock Stands Now
Boeing managed a fractional gain in dull turnover. Perhaps the most beleaguered stock within IBD's aerospace and defense industry group over the past five years, the Dow component has quietly rallied to the point that a potential entry has emerged within decent sight.
On Dec. 19, Boeing announced it received a firm order for 100 737-10 aircraft from Pegasus Airlines. The agreement includes an option for 100 additional jets from the international low-cost carrier. Pegasus serves primarily Turkey and neighboring countries in the Middle East.
Boeing stock, plagued by the loss of market share due to two tragic crashes involving its 737 Max jets, crippling labor disputes, and issues surrounding quality control, still trades nearly 60% off its March 2019 peak of 446.01. Recently, however, the stock is on pace to post gains in five out of six weeks.
That rebound has lifted Boeing to within just 8% away from a near-term high of 196.95.
Put another way, the stock has been building a new base for months. If Boeing can hold recent gains and get closer to that July 31 high of 196.95, the stock could set up a potential breakout and new buy opportunity.
Arguably, Boeing is building a bottoming base since making a torrid decline to as low as 89 in March 2020.
Fundamentals have been wretched at the Chicago-based civilian and defense aerospace giant. Over the past four quarters, the company has posted a cumulative net loss of $14.94 per share, according to MarketSurge. But analysts on consensus forecast a huge turnaround in 2025, expecting the company to earn $1.20 a share.
Boeing stock has 747.2 million shares outstanding and a $135 billion market value, almost one-tenth the value of chip giant Broadcom, currently a tech leader in the stock market today.
11:53 a.m. ET
Nasdaq Holds Lead Over S&P
Through Thursday's action, the Nasdaq held a commanding lead over the S&P 500 in the year-to-date rally race, up 33.3% for the former vs. up 26.6% for the latter. The Russell 2000, at 2,271, held a decent gain of 12% yet still sharply lags the large caps.
Among megacap techs, Meta Platforms demonstrated a tinge of sluggishness seen among a select group of techs so far in December. Granted, both Meta, a major Leaderboard portfolio holding, and the Nasdaq have risen valiantly in 2024. Still, the social media giant is not seeing much lift since breaking out of a flat base showing a 602.95 buy point.
Meta maintains general excellence in its IBD ratings. They include a 96 Composite Rating and an 88 Relative Strength Rating.
Also, the Nasdaq-listed leader deserves merit for rebounding well during recent pullbacks to and below the 50-day moving average. At its year-to-date peak of 638.40, the Facebook, WhatsApp and Instagram operator has gained as much as 80%. That's an astounding gain, given that in the stock vaulted 194% in 2023.
10:39 a.m. ET
Bonds Hit Stocks Again?
Sellers again took control of the government bond market, sending yields higher. An increase in the cost of money can have a dampening effect on consumer spending.
The yield on the U.S. Treasury 10-year note jumped four basis points to touch its highest level since May 29. Meanwhile, ProShares UltraShort 20+ Year Treasury gained more ground. It has cleared a cup-with-handle entry at 35.66. The exchange traded fund is designed to rise when Treasury bond prices fall and yields rise, and it is levered to deliver twice the move as the Barclays 20+ Year U.S. Treasury Index.
Within the Dow Jones industrials, keep a close eye on Home Depot. It was among a bunch of blue chip components falling one point or more in the stock market today. The home improvement chain recently cut right through the 50-day moving average and fell below a breakout point at 421.56.
The golden rule of IBD-style investing is to keep losses minimal in every trade.
Home Depot has lagged the large-cap indexes, rising 13% since Jan. 1. Its Relative Strength Rating of 67 is mediocre. Earnings are seen dipping 1% in the fiscal year ending in January, then rising just 4% in the next fiscal year.
Please follow Chung on X/Twitter: @saitochung and @IBD_DChung
