Stock Market Today: Indexes Bounce Lightly As Microsoft Eyes This Sell Signal

Today, the stock market acted like usual during earnings season - with lots of intraday volatility. Major indexes, however, showed some bullishness on Thursday. This was a day after IBD announced a major change to the outlook. Microsoft (MSFT), despite pulling away from its intraday lows, was looking for a sell signal.

Interactive Brokers, a growth stock, flexed its unusual strength this week, gaining nearly 5% in a new breakout. Discount broker shares surged 2% on above-average volumes as they cleared the top of a cup-like base that appeared erratic.

Interactive Brokers has, in recent weeks, formed a handle that gives a solid buying point of 87.09. The 5% zone of buys from 87.09 to 91.44 goes up. Avoid buying strong moves more than 5% over the entry. IBKR belongs to IBD SwingTrader.

Some Tech Stocks Dive On Results

Early on, a slightly larger than expected rise in weekly unemployment claims (227k vs. Econoday's consensus estimate of 225,000) probably did not have a significant impact.

It was likely the poor reaction to earnings by wireless technology giant Qualcomm QCOM (down 9% on heavy trading), marketing and electronic payment software firm HubSpot SPOT (down 10% on triple average volume), and a few tech-oriented firms that sparked initial gloom.

The stock market started to rise about an hour and fifteen minutes into the regular trading session.

The Nasdaq 100 reversed a 0.7% drop into a small gain. The Nasdaq Composite edged up 0.1%, a little better than the S&P500 and the iShares Russell 2000 exchange traded fund (IWM), which both suffered tiny losses. Both indexes dipped by 0.1%, after initially falling by more than 0.6% or 1%.

Stock Market Today: Mixed technicals

Dow Jones Industrial Average was also near break-even. The Nasdaq volume was significantly higher than the same time on Wednesday. However, the NYSE volume was slightly lower.

The higher turnover on Nasdaq was a clear indication of more activity following earnings in Nasdaq listed stocks. As noted in the Stock Market Today article, several megacap technology giants will report their quarterly results following the close of regular trading.

Interesting, the Nasdaq's breadth was almost flat.

Thinkorswim's data shows that there were 2,142 stocks in advance compared to 2,135 declining ones. Losing issues were 3-2 more than gainers on the NYSE.

IBD's 197 industries groups saw cable and satellite equipment firms drop 6.4%, airlines plummeting by 4.2%, electronic parts, travel, lodging, and enterprise software all dropping more than 3%, and farm machinery falling 2.7%.

At least four oil-and-gas industry groups have seen their stock prices rise by 2.3% or even more.

Microsoft's stock, if we go back to 2023, has undoubtedly had a spectacular run. The shares have increased by as much as 52 percent from their 2022 year-end closing price of 239.82.

Microsoft has lost its buying support near or at the 50-day moving-average. This is the first time it's done this since mid-March when it crossed the breakout point of 276.76.

On a daily chart, notice how shares fell by 2.1% on July 27 in a high volume. They also undercut the 50 day line (the line red drawn beneath the price bars). MSFT recovered quickly but in a lighter volume. This was a sign of a lack in new institutional demand.

Further declines will squeeze profits from the 276.76 entry point, which is a good flat-base buy. Also, gains from a handle entry of 292.08 would be squeezed. IBD readers looking to make short- or medium-term trades understand that using sell signals is important to protect hard-earned gains. They should wait until a new basis forms before reentering the stock.

The Comeback Kids?

On a weekly chart, notice how MSFT's current price is nearly 3% lower than its 10-week moving median. A sudden drop below the 10-week line is a good sell signal.

Microsoft announced a 21% increase in its fiscal fourth quarter profit, which amounted to $2.69 per share. This was the second consecutive quarter of earnings growth acceleration. Sales rose only 8%, to $56.2 billion. This continued a trend of growth in the single digits.

Redmond, Wash.-based firm's sales increased by 22%, 20 %, 18 %, 12%, and 11% from the previous year.

IBD Live on Thursday continued to spotlight a few rising leaders in the energy sector.

HAL is approaching the potential resistance of 40 and is currently on its sixth consecutive week.

In a very thin volume, Schlumberger (SLB), a fellow oil field services company that has rebranded as SLB and rebranded their corporate name to SLB, gained 0.6%. Look for the potential handle on its six-month pattern.

SLB's Cup shows a healthy decline of 28% from top to bottom. On July 7, it regained the 200-day mark in heavy turnover, a sign of large funds grabbing shares enthusiastically.

The Composite Rating of both stocks is 95 out of 100 on a 1 to 99 scale.