Joe Mazzola, director of trading and education with Charles Schwab, joined Cheddar News to discuss Wednesday’s trading session as markets closed mixed.
NEW YORK — U.S. stocks drifted to a mixed finish Wednesday, as drops for Microsoft and other big-name tech stocks overshadowed gains across much of the rest of Wall Street.
The S&P 500 fell 16.33, or 0.4%, to 4,267.52 even though the majority of stocks within the index rose. The Dow Jones Industrial Average gained 91.74, or 0.3%, to 33,665.02, while the Nasdaq composite fell 171.52, or 1.3%, to 13,104.89.
Microsoft, Amazon, Nvidia and Alphabet all sank at least 3% and were the heaviest weights on the S&P 500. As some of Wall Street’s most valuable stocks, their movements pack extra punch on the index.
It’s a reversal from much of this year, when high-growth stocks led the way on hopes the Federal Reserve would ease interest rates and amid excitement about artificial intelligence. Tech stocks are seen as some of the hardest hit by higher interest rates, and yields were on the rise in the Treasury bond market.
Table of Contents
People are also reading…
The yield on the 10-year Treasury rose to 3.78% from 3.68% late Tuesday. The two-year yield rose to 4.55% from 4.50%.
Yields climbed after the Bank of Canada raised its policy interest rates Wednesday, surprising some investors after it had left rates steady since January.
A pedestrian walks past the New York Stock Exchange building shrouded in smoke and haze Wednesday in New York City.
Campbell Soup, meanwhile, sank 8.9% after reporting weaker revenue than expected for the latest quarter. It also gave a forecast for earnings that fell short of analysts’ expectations, as price increases push some customers to buy less.
Much of the rest of the market rose. The Russell 2000 index of smaller stocks jumped 1.8% to continue its hot streak since a stronger-than-expected report on hiring last week.
On the winning side of Wall Street was Dave & Buster’s, which jumped 18.3% after reporting stronger profit than expected for the latest quarter.
Brown-Forman rose 4% after the spirits company reported stronger profit than expected for the latest quarter, thanks in part to growth for its Woodford Reserve brand.
Next week, the U.S. government is scheduled to release the latest monthly updates on inflation at the consumer and wholesale levels and the Fed will announce its latest move on interest rates.
Most traders expect the Fed to leave rates steady. That would mark the first meeting in more than a year where it hasn’t hiked rates.
China, the world’s second-largest economy, reported its exports fell 7.5% from a year earlier in May and imports were down 4.5%, adding to signs of a slowing of its economic recovery from the COVID-19 pandemic.
The decline in exports was the first year-on-year drop in three months, and export volumes fell below their levels at the start of the year.
Stocks in Shanghai gained 0.1%, while Hong Kong’s Hang Seng rose 0.8%.
Tokyo’s Nikkei 225 index lost 1.8%, the sharpest decline in 12 weeks.
7 proven strategies to identify potential breakout stocks and boost your investment portfolio
7 proven strategies to identify potential breakout stocks and boost your investment portfolio
A stock that surpasses its support or resistance level is considered a breakout stock. These levels represent the price points that the stock has struggled to move beyond during a specific period. Breakouts are seen as a strong indicator that the stock is likely to continue its upward trend.
However, identifying breakout stocks that will perform well in the future can be challenging. To spot potential winners, using a combination of analysis and intuition is necessary. It’s important to remember that investing in individual stocks can be risky, and there is no guarantee that a single stock will perform well. If you need help with your investment plan, a financial advisor can play a valuable role in helping spot potential breakout stocks by using their expertise to balance risk and potential rewards.
Bankrate has compiled seven ways to identify and profit from potential breakout stocks.
1. Look for companies with a competitive advantage
If you want to look for stocks that might exceed their resistance level, focus on companies with a competitive advantage. These companies are more likely to outperform their peers, increasing the chance of a breakout. Look for companies with patented technology, strong brand recognition or unique business models. All these factors could give them an edge over their competitors, boosting the chance of a stock breakout.
2. Watch for key market trends
Anyone who deals in stock trades should keep an eye on market trends, and breakout stock traders are no exception. By keeping an eye on market trends, you can identify sectors that may experience growth in the near future. Pay attention to areas where demand is increasing, and where there is room for new players to enter the market.
3. Monitor volume and price
One way to identify potential breakout stocks is by looking for those with increasing volume and price momentum. Breakout stocks often have a sudden surge in trading volume, which may indicate growing investor interest. Additionally, keep an eye out for stocks that are breaking through key resistance levels or forming bullish chart patterns, such as cup-and-handle, ascending triangles or flag patterns.
4. Identify companies with strong fundamentals
To identify promising companies, look for those with strong fundamentals, like increasing revenue, growing profits and positive cash flow. Those indicators suggest that they are doing well financially, and these companies tend to be more likely to break out. You can find these numbers in quarterly reports or with a web search for “(Company name) earnings.”
5. Track a stock’s relative strength
Even if a stock appears strong, remember that everything is relative. To evaluate a stock, it’s important to compare it to its sector or peers and ensure it is strong compared with other alternatives. Breakout stocks typically outperform the market and their sector, indicating the potential for further growth. The relative strength index (RSI) is a commonly used technical indicator for gauging the strength of a stock relative to its peers.
6. Keep an eye out for catalysts
Catalysts are recent developments that could drive stock prices upward. These could include successful product launches, favorable regulatory decisions or mergers and acquisitions. Also keep an eye out for positive earnings surprises and upward revisions in earnings estimates. As you can see, anything that creates a positive outlook for the company’s earnings can contribute to a breakout.
7. Exit at your target price
Once the stock reaches your target price, it is advisable to exit the position and take your profits. Typically, stocks that break out beyond their resistance levels often come back down shortly after. This is one reason why it’s important not to drag your feet when it comes to exiting the position. When that time comes, be sure to move on and look for your next opportunity.
Bottom line
Although identifying breakout stocks is not an easy task, it can provide your portfolio with a significant advantage. Look for companies that appear strong by checking their fundamentals, comparing them to the market, and by seeking out companies with a competitive edge. These are just some of the ways you can profit from breakout stocks that are set to break past their resistance lines.
This story was produced by Bankrate and reviewed and distributed by Stacker Media.
