Intel (INTC) attempted a breakout Wednesday, but the stock closed a buy point after moving in light volume. Fellow Dow Jones stocks Apple (AAPL), Microsoft (MSFT), UnitedHealth (UNH) and Visa (V) are near buy points in sound bases. These blue chips’ relative strength lines have already hit new highs, a very bullish signal.
The relative strength line tracks a stock’s performance vs. the S&P 500 index. The RS line, the blue line in the charts below, is always a good way to determine if a stock is a leader or laggard. It’s a specialty breakout tool for investors, because an RS line hitting a new high with or ahead of a stock is particularly bullish.
Intel’s low-volume breakout attempt is not a great sign, and several other stocks hit buy points Wednesday in tepid trade. Looking back, Apple, Intel, Microsoft and Visa had been rising in recent sessions on light trade, suggesting a lack of institutional support. UnitedHealth has had back-to-back gains in strong volume, especially with Tuesday’s estimate-beating earnings.
Apple, Intel and Microsoft account for three of the five Dow Jones tech stocks. Cisco Systems (CSCO) is acting well, with its RS line just below a new high. IBM (IBM) topped earnings views late Tuesday, but weak margins and other concerns sent the stock tumbling 7% Wednesday intraday. Big Blue has an RS line that’s been in a downtrend since late 2011.
Intel
Intel rose 0.1% to 53.61, fading into the close and finishing below the 53.88 entry point. The stock rose as high as 54.35 intraday, its best level since September 2000. Volume was below average. Investors should look for volume to rise at least 40%-50% above normal on a breakout.
Apple
Apple fell 0.2% to 177.84 in the stock market today. On Tuesday, the stock rose 1.4% to 178.24 on Tuesday, about 3% below a 183.60 flat-base buy point. The iPhone maker cleared a sloppy, V-shaped flat base on March 12, but then reversed lower along with the Nasdaq composite on March 13. The breakout soon failed, with shares finding support at the 200-day line. Apple regained its 50-day line on April 17.
The RS line is at a consolidation high and its best levels since late November. But it hasn’t made much headway since last May.
Apple has risen in nine of the past 11 sessions, but all of those gains have come in light volume
Microsoft
Microsoft edged up 0.4% to 96.44 Wednesday. The stock climbed 2% on Tuesday to 96.07, close to a 97.34 buy point. Like Apple, a prior breakout quickly failed with the Nasdaq-led reversal starting March 13.
UnitedHealth
Dow Jones health insurance giant UnitedHealth topped profit and revenue views early Tuesday while also raising guidance. Shares jumped 3.6% to 238.55 during the session, working their way toward a 250.89 buy point. On Wednesday, shares slid 0.9%.
Visa
Visa rose 1.6% on Tuesday to 123.80, then advanced 0.6% to 124.50 intraday Wednesday. The credit and debit card giant has by far the messiest chart of these five Dow Jones stocks. Visa topped a 125.40 entry for just a moment on March 21, touching 125.44 intraday, but then reversed lower. The stock fell 7.5% below the buy point, making that an automatic sell. Investors could consider 125.54 a buyable resistance area. Otherwise, look to 126.78 as an entry.
