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Joe Mazzola, director of trading and education at Charles Schwab, joined Cheddar News to cover Wednesday’s trading session as markets closed mixed.
NEW YORK US stocks fell to a mixed end on Wednesday, as declines for Microsoft and other big technology stocks eclipsed gains in 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 in the index rose. The Dow Jones Industrial Average gained 91.74, or 0.3%, to 33,665.02, while the Nasdaq index fell 171.52, or 1.3%, to 13,104.89.
Microsoft, Amazon, Nvidia and Alphabet all fell at least 3% and were the heaviest weighers in the S&P 500. As some of Wall Street’s most valuable stocks, their moves have additional impact on the index.
It’s a reversal from much of this year when high-growth stocks led the way in hopes that the Federal Reserve would cut interest rates and amid excitement over artificial intelligence. Technology stocks are seen as some of the hardest hit by higher interest rates, and government bond market yields rose.
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The yield on the 10-year Treasury rose from 3.68% at the end of Tuesday to 3.78%. The two-year rate rose from 4.50% to 4.55%.
Yields rose after the Bank of Canada raised its key interest rates on Wednesday. This surprised some investors after interest rates had held steady since January.
A pedestrian walks past the New York Stock Exchange building in New York City on Wednesday, shrouded in smoke and haze.
J. David Ake, Associated Press
Campbell Soup, meanwhile, fell 8.9% after sales for the last quarter came in lower than expected. It also forecast earnings that fell short of analyst expectations as price increases prompted some customers to buy less.
Much of the rest of the market rose. The Russell 2000 index of smaller stocks rose 1.8%, continuing its hot streak since a stronger-than-expected hiring report last week.
On the winning side of Wall Street was Dave & Buster’s, which rose 18.3% after a stronger-than-expected profit for the last quarter.
Brown-Forman rose 4% after the spirits company reported stronger-than-expected earnings for the last quarter, helped by growth in its Woodford Reserve brand.
Next week, the US government will release the latest monthly updates on consumer and wholesale inflation and the Fed will announce its latest move on interest rates.
Most traders expect the Fed to keep interest rates stable. That would be the first meeting in more than a year in which interest rates have not been raised.
China, the world’s second-largest economy, reported exports fell 7.5% year-on-year in May and imports 4.5%, adding to signs of a slowdown in economic recovery after the COVID-19 pandemic.
The fall in exports was the first year-on-year decline in three months and export volumes fell below the level recorded at the beginning of the year.
Shares in Shanghai gained 0.1%, while Hong Kong’s Hang Seng rose 0.8%.
The Nikkei 225 index in Tokyo lost 1.8%, its sharpest fall 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 crosses its support or resistance level is considered a breakout stock. These levels represent the price points that the stock has struggled to rise over a period of time. Breakouts are seen as a strong indicator that the stock is likely to continue its upward trend.
However, it can be challenging to identify breakout stocks that will perform well in the future. Spotting potential winners requires a combination of analysis and intuition. It is important to remember that investing in individual stocks can be risky and there is no guarantee that any single stock will perform well. If you need help with your investment plan, a financial advisor can play a valuable role in spotting potential breakout stocks by using their expertise to balance risk and potential reward.
Bankrate has put together seven ways to identify and capitalize on potential breakout stocks.
1. Look for companies with a competitive advantage
If you want to find stocks that could break their resistance level, focus on companies with a competitive advantage. These companies outperform their competitors, increasing the likelihood of a breakout. Look for companies with proprietary technology, strong brand recognition, or unique business models. All of these factors can give them an edge over their competitors, increasing the likelihood of a breakout.
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2. Pay attention to key market trends
Anyone who trades stocks should keep an eye on market trends, and breakout stock traders are no exception. You can do that by keeping an eye on market trends 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 to look for stocks with increasing volume and price momentum. Breakout stocks often have a sudden surge in trading volume, which may indicate growing interest from investors. In addition, keep an eye out for stocks breaking or forming key resistance levels bullish chart patternssuch as cup-and-handle, ascending triangles or flag patterns.
4. Identify companies with strong fundamentals
To identify promising companies, look for companies with strong fundamentals, such as rising revenues, growing profits and positive cash flow. Those indicators suggest that they are doing well financially, and these companies are more likely to break through. You will find these numbers quarterly reports or with an internet search for “(Company Name) earnings.”
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5. Track a stock’s relative strength
Even if a stock seems strong, remember that everything is relative. To evaluate a stock, it’s important to compare it to its industry or peers and make sure it’s strong against other alternatives. Breakout stocks typically outperform the market and their industry, indicating the potential for further growth. The Relative Strength Index (RSI) is a commonly used technical indicator to measure a stock’s strength against its peers.
6. Watch out for catalytic converters
Catalysts are recent developments that could boost stock prices. These may include successful product launches, favorable regulatory decisions or mergers and acquisitions. Also keep an eye out for positive earnings surprises and upward revisions to earnings expectations. As you can see, anything that creates a positive outlook for the company’s earnings can contribute to a breakthrough.
7. Get out at your target price
Once the stock reaches your target price, it is advisable to exit the position and take your profit. Typically, stocks that break above their resistance level often fall again shortly afterwards. This is one reason why it’s important not to drag your feet when it comes to exiting the position. When that time comes, definitely continue and look for your next opportunity.
It boils down
While identifying breakout stocks is no easy task, it can give your portfolio a significant advantage. Look for companies that seem strong by checking their fundamentals, benchmarking them against the market, and looking for companies with a competitive advantage. These are just some of the ways you can take advantage of breakout stocks poised to break through their resistance lines.
This story was produced by Bank rate and reviewed and distributed by Stacker Media.
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