foxex: Apple Leads

Monday, December 16, 2019

Apple Leads

Chart Advisor | Focus on the Price

By Gordon Scott, CMT

Monday, December 16, 2019

1. Markets extend rally led by tech sector

2. Half of Dow Jones Industrial index components at highs

3. Microsoft and Apple drive Nasdaq 100 higher

Market Moves

As bond and commodity markets languished, the stock market indexes extended their strong rally and closed decisively higher today. Investors showed that they expect this bullish market to continue well into 2020. The S&P 500 (SPX), up 27 percent for the year, the Nasdaq 100 (NDX), up 35 percent for the year, and the Dow Jones Industrial Average (DJX), up 21 percent for the year, all closed at 52-week highs.

The most influential stock at the moment, and a component of all three indexes, is Apple (AAPL). Over the past three trading sessions AAPL shares have charged ahead by nearly ten percent, on pace to nearly double the Nasdaq 100 performance this year. As Apple continues higher it creates a bullish forecast for 2020.

Half of Dow Jones Industrial Index Components at Highs

At the close of trading today, only six out of the thirty component stocks which make up the Dow Jones Industrial Average closed lower than the previous day. The only stocks that rose higher than Apple's 1.71% increase were United Health Care (UNH) at 2.29% and Pfizer (PFE) at 2.11%. When Healthcare stocks and technology stocks both lead the index, this is also a bullish signal.

Yet another bullish signal comes in the number of Dow index components at or near their 52-week highs. The majority of these components (16 of the 30) closed at or near their 52-week highs. The breadth of this rally signals that there is enough investor enthusiasm to drive higher into 2020.

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Microsoft and Apple drive Nasdaq 100 higher

Microsoft (MSFT) and Apple together now account for nearly 30 percent of the weighting of the Nasdaq 100 index. Along with Intel (INTC), these stocks are components in all three major indexes. Where these two stocks lead, the indexes will surely follow. With both of these bellwether stocks hitting their 52-week highs, it indicates that the market's bullishness is not ephemeral and may be likely to continue.

The Bottom Line

Stocks closed strongly higher today to extend the rally that began the previous week. Apple and Microsoft both led the way higher, along with stocks in the healthcare sector.