Blue Chips Clear Hurdle, As Stock Market Holds Most Of Gains – Investor's Business Daily

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Blue chips overcame resistance at a key line with an hour of trade left in Monday’s session. The U.S. stock indexes were on track for their third straight gain.

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The Dow Jones industrial average climbed 1.4%, becoming the last of the major indexes to cross above its 50-day line. The line had been acting as resistance for more than two weeks and could now become support.

The 50-day line often acts as a test area. When either a stock or an index trade above the line, the 50-day can act as a test for support. When the price is below the line, the 50-day can act as resistance.

Meanwhile, the S&P 500 rose 0.8%, while the Nasdaq gained 0.7%. The small cap Russell 2000 lagged with a 0.6% pop.

Volume rose on both major exchanges compared to the same time Friday.

In the blue chip Dow, Caterpillar (CAT) and JPMorgan Chase (JPM) advanced 4% and 3% respectively.

Caterpillar had fallen as much as 23% off its high since mid-January. The decline was blamed on President Trump’s protectionist stance, which now has progressed to a trade war with China.

Yet, Caterpillar was doing fine Monday afternoon. Some market watchers still regard Trump’s moves as negotiating tactics rather than actions of conviction. If so, then stocks may be ready for a substantial relief rally.

Earnings season, too, holds the potential to drive stock prices higher. Results from JPMorgan are due Friday before the open.

Other firms reporting quarterly results this week include Pepsi (PEP) on Tuesday; Bank of the Ozarks (OZRK), Delta Air Lines (DAL) and Fastenal (FAST) on Wednesday; and Citigroup (C) and Wells Fargo (WFC) on Friday.

Personal care products provider Helen of Troy (HELE) gapped up 13% after reporting results from fiscal Q1 ended in May. Adjusted earnings rose 33%, topping views by 28%, according to William O’Neil + Co. data.

(For updates on this story and other market coverage, check IBD’s stock market news today.)

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