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Techs, FAANG Stocks Surge; This Top Growth Stock Flashes Bullish Early Breakout – Investor's Business Daily

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Wall Street showed continued confidence in the economy on Thursday as FAANG companies and other market leaders flexed strength in stocks today. The buying surge offset weak moves by some names in the apparel retail, department-store and bank industries.

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The Nasdaq composite roared more than 1.3% higher by day’s end and notched a new all-time high of 7823, up 13.3% for the year. The S&P 500 and the Dow Jones industrial average trailed with gains of nearly 0.8% to 0.9%. Volume ran nearly 10% higher vs. Wednesday on the Nasdaq and fell nearly 5% on the NYSE, according to preliminary data.

Among the FAANG plays, Netflix (NFLX) cooled off with a 1.2% decline to 413.50 in trading that boosted 43% above usual levels. Yet the stock holds a comfortable cushion above its rising 50-day moving average. The Leaderboard member is up 115% year to date. The four other FAANG techs advanced 1.5% to 2.4%.

Apple (AAPL), up 1.7% to 191.11, has now risen 6.7% past a 179.04 proper buy point in a seven-week double bottom.

Meanwhile, enterprise software companies firmed up their leadership role with more gains. Two top names in HR, finance and payroll management, Workday (WDAY) and Paycom Software (PAYC), advanced more than 4% and 3%, respectively. Paycom’s turnover came in 9% below its 50-day average. But it was also the highest in more than two weeks.

Workday joined the IBD Leaderboard as the 10th current stock in the hand-selected list of top growth companies. It triggered an aggressive entry point in a Shakeout+3 pattern. Workday also has been forming a double-bottom base, one of the eight bullish patterns that every growth investor needs to know to time their buys in the strongest market leaders.

More than 2.6 million Workday shares exchanged hands on Thursday, 38% above its 50-day average.

In general, seek out those highly rated stocks that form solid bases, then break out past a proper entry in volume at least 40% above average. Huge volume on the breakout day boosts the chance that a growth investor will make money in a relatively short period of time. Sometimes, however, big volume can arrive in the days after a breakout.

The Nasdaq 100, tracking the 100 largest nonfinancial companies on that all-electronic exchange, rose 1.5%. Within the FAANG names, Alphabet (GOOGL) rallied 2.6% to 1201 and notched a new all-time closing high.

The stock is close to surpassing a new handle on its nearly six-month chart pattern, a bullish double bottom. The double bottom features two sell-offs, and the second low must undercut the first low. If no handle forms, the typical buy point is 10 cents above the middle peak in between the two lows.

A New Uptrend For Alphabet Underway?

While the Google search engine, AI and self-driving-car company has not been seeing the triple-digit growth that it once enjoyed soon after its 2004 IPO, it’s still showing solid growth as a megacap company.

In 2017, Alphabet grew profit by 29% to $35.90 a share as revenue rose 23% to $110.86 billion, eclipsing the $100 billion level for the first time.

The Street sees earnings climbing 23% to $44.28 a share in 2019.

Revenue has jumped 21%, 20%, 22%, 22%, 21%, 24%, 24% and 26% vs. year-ago levels in the past eight quarters.

As seen in IBD Stock Checkup, Alphabet earns a top-notch A for SMR Rating, which stands for Sales + Profit margins + Return on equity.

Alphabet is highlighted in today’s IBD Stock Of The Day feature.

Top Growth Stock Breaks Out Early

Workday joined the Leaders list of Leaderboard as it moved further past an aggressive entry of 160.9

The daily and weekly charts of Leaderboard names are annotated by senior markets writers to flag critical buy points, timely sell signals, and instances of chart action that indicate unusual strength.

Fellow enterprise software names ServiceNow (NOW), Salesforce.com (CRM) and Ultimate Software (ULTI) gained 4%, 2%, and 1.3%, respectively.

Software continues to rank as the No. 1 sector among 33 tracked by IBD for mid- to long-term performance. See the full rankings in IBD’s NYSE and Nasdaq stock tables.

Ultimate Software corrected sharply for two weeks but has rebounded fiercely. Still, its latest action is too narrow to qualify as a proper cup base.

The company’s earnings jumped 73% to $1.30 a share in Q2, the biggest year-over-year increase in at least 18 quarters. Revenue grew 21% to $276.8 million, a quarterly best.

Stocks Down In Heavy Volume

On the downside, Broadcom (AVGO) dragged down the fabless semiconductor industry group. The large-cap designer and maker of many types of electronic chips at one point gapped down more than 18% in huge volume following news that it’s buying business software firm CA (CA). Analysts reportedly criticized the decision.

Broadcom ranked on the top of the “Down in Price” section of IBD’s Stocks On The Move table. Bank of the Ozarks (OZRK), Zumiez (ZUMZ) and L Brands (LB) also dropped significantly in huge turnover. That’s usually a sign of heavy institutional profit-taking or pure selling.

Small caps lagged a touch on Thursday, yet remain leaders in year-to-date performance.

The Russell 2000 rose just 0.4%, but at 1690 the popular small-cap index boasts a 10% gain since Jan. 1. The S&P 500, closing the session at 2798, is up 4.6%.

(Please follow Saito-Chung on Twitter at @IBD_DChung for more commentary on growth stocks, charts, and financial markets.)

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