Futures for the S&P 500 index, Dow Jones industrial average and Nasdaq 100 rose solidly early Thursday morning after the major averages rallied for a fourth straight session on Wednesday. Cisco Systems (CSCO), Applied Materials (AMAT), NetApp (NTAP), Teva Pharmaceutical Industries (TEVA) TripAdivsor (TRIP) and SolarEdge Technologies (SEDG) were active late, with some notable winners and losers.
X The Nasdaq composite rose 1.9% on Wednesday, retaking its 50-day moving average. The Dow industrials rose 1% and the S&P 500 index 1.3%. All climbed in higher volume.
After a rapid 10% decline in the S&P 500 and Dow Jones, triggering a stock market correction call on Feb. 8, the major averages have raced back.
S&P 500 futures rose 0.4% above fair value. Dow futures advanced 0.4% vs. fair value. Nasdaq 100 futures climbed 0.75%.
IBD’S TAKE: The market outlook has changed. Investors should read the latest The Big Picture for timely analysis of the major averages and leading stocks.
Cisco stock jumped nearly 7% to 44.90 in late trading. Shares rose 2.1% to 42.09 in Wednesday’s stock market trading, closing in on their 17-year high of 42.98 set on Jan. 29.
Cisco rallied on strong earnings, guidance and a $25 billion stock buyback. Revenue rose 3%, the first increase in eight quarters.
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Applied Materials was up and down in seesaw trade late after reporting better-than-expected earnings and a strong outlook. The chip and display-equipment giant also announced a $6 billion buyback and doubled its quarterly dividend to 20 cents a share.
In the regular session, Applied Materials jumped 4.9% to 51.96, rebounding from its 200-day moving average and closing in on its 50-day line. Chip equipment makers were among the big winners in Wednesday’s bullish rally.
NetApp reported better-than-expected adjusted earnings and revenue, as well as providing upbeat guidance. The data storage giant did post a huge GAAP loss due to the Trump tax cuts.
Shares fell 11% late. NetApp had closed up 3.25% to retake its 50-day line.
Teva shot up 8% late. That suggests that the stock will blast above its 200-day moving average Thursday morning, something it hasn’t done in two years.
Teva has suffered a series of woes, including concerns over drug pricing and patents. But Berkshire Hathaway (BRKB), run by Warren Buffett, announced it bought 18.9 million Teva shares in the fourth quarter.
SolarEdge vaulted higher on blowout earnings. The stock leapt 15% in overnight trade to 42.40. That suggests a move above a consolidation buy point of 40 at Thursday’s open.
Shares had closed up 2.5% to 36.90, retaking their 50-day line.
The relative strength line, which tracks a stock vs. the S&P 500 index, is lagging its late-November peak. But a gap-up stock gain Thursday would give the RS line a big boost.
SolarEdge is in a third-stage base. Late-stage bases are less likely to deliver big winners than early-stage breakouts.
TripAdvisor reported a sharper profit decline than expected. But the online travel site beat on revenue, gave bullish guidance and announced a $250 million stock buyback. Shares surged 17% late to 47.55. That suggests a move above a 46.07 bottoming base at Thursday’s open.
But breakouts from bases that largely form below their 200-day line are more prone to failure. Also keep in mind that TripAdvisor has a lowly 33 Composite Rating out of 99, with spotty earnings and a long stock decline. Investors should generally be looking for stocks with high Composite Ratings, often 95 or above.
Keep in mind that overnight action doesn’t always translate into how a stock will trade the following session.
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