Dow Jones gets like 3 Warren Buffett shares Eye Buy Points; Microsoft falls on bearish call
The Dow Jones Industrial Average finished off session highs as stocks faded late and ended mixed. A trio of Warren Buffett stocks are nearing buy points. Coin base (COIN) and Riot Blockchain (RIOT) rose as Bitcoin’s top crypto gained. Meanwhile, Microsoft (MSFT) fell after an analyst note.
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There were plenty of breakouts despite the measured action. Skechers (SKX), Builders FirstSource (BLDR) and Tri Pointe Homes (TPH) all tested entries.
Treasury yields rose. The 10-year yield rose 1 basis point to 3.43%, while the two-year yield rose 3 basis points to 4.03%, making the yield curve more inverted.
Nasdaq Lags As Small Caps Jump
The Nasdaq lagged behind the other major indexes and ended the session down 0.4%.
The benchmark S&P 500 fell nominally, but closed essentially flat. CarMax (KMX) rocketed 9.6% on a 4th quarter earnings pace. It had its best gain since April 17, 2020, when it rose 10.4%, according to Dow Jones Market Data.
The S&P 500 sectors ended mostly positive. Economy, energy and materials were the best. Technology and communications services were the only areas in negative territory.
Small caps outperformed for the second day in a row, with the Russell 2000 rising 0.8%. Growth stocks also excelled, with the Innovator IBD 50 ETF (FFTY) rising 0.8%.
Dow Jones today: Microsoft hit after this call
The Dow Jones index managed to end the day on positive ground. It rose 98 points, or 0.3%, after trimming gains.
larva (CAT) performed well again, rising 2.4%. It is pulling away from its 200-day moving average.
The Microsoft share performed worst on the blue chip index. It fell 2.3% but remained above key moving averages. It is trading above a buy point of 276.86, according to MarketSmith analysis.
The stock fell after UBS trimmed estimates on its Azure cloud platform. The firm has a neutral rating on MSFT with a target of 275.
“Based on our (roughly) 20 conversations with AWS/Azure customers and partners, we conclude that customers’ efforts to optimize/trim cloud spending will be deeper and last longer than most believe,” analyst Karl Keirstead said in a note to the customers. “Relative to the consensus view that we are deep enough into these efforts that the slowdown in cloud growth can begin to moderate meaningfully as early as (Q2 of 2023), we conclude that such efforts will continue at a high level through 2023. “
Warren Buffett stocks eye listings
A trio of stocks owned by the Warren Buffett-led Berkshire Hathaway (BRKB) is currently looking at contributions.
Insurance game Aon (AON) is nearing a cup-with-handle entry at 328.43, MarketSmith analysis shows.
Aon’s IBD Composite Rating comes in at 82 out of 99. Revenue is a key strength, with the EPS rating a strong 88 out of 99.
MasterCard (MA) forms a double bottom base with an ideal entry point at 369.25. The stock cleared its 50-day moving average on Tuesday, a bullish sign.
MA stock has an IBD Composite Rating of 93. Big Money has bought the stock recently, with the Accumulation/Distribution rating at B.
Buffett is also a holder of Leaderboard Watchlist shares Flooring and furnishings (FND), which is currently near an entry of 102.71. Floor & Decor operates 191 warehouse format stores and six design studios in 36 states. It has an EPS rating of 97 out of 99.
Berkshire is in the news after Buffett said he is adding to the company’s Japan holdings. Berkshire has raised its stake in each of Japan’s top five trading houses – Itochu, Mitsubishi, Mitsui, Sumitomo and Marubeni – to 7.4%.
The Buffett boss, whom some call the “Oracle of Omaha,” said in an interview that further investment in Japan “is always a matter of judgment.”
Coinbase stock, RIOT jump as Bitcoin gains
Crypto trading platform Coinbase surged amid another surge in Bitcoin prices.
COIN stock ended up 6.1%, but remained well below a cup-with-handle buy point of 85.48. It is now up about 109% so far this year.
Bitcoin, the most famous cryptocurrency, rose 1.7% on Tuesday. It’s now up almost 82% in 2023, an impressive run by anyone’s standards.
Other digital currency bets also rose. Grayscale Bitcoin Trust (GBTC) jumped 3.3%.
But it was Bitcoin miner Riot Blockchain that impressed the most as it surged 17%, contributing to Monday’s 15.5% gain.
Outside the Dow Jones: Skechers Leads Breakouts
With the stock market in a confirmed uptrend, staying on top of breakouts remains key.
Skechers is in a buy zone after clearing a cup-with-handle entry at 47.80. The volume was 46% above average.
Builders FirstSource is bullish after rising above a flat buy point at 90.31. The relative strength line has moved to a fresh high. Volume was 60% above average. Ideally, the volume should swell at least 40% at breakout.
Earnings are a key strength of this construction product game. It has a near-perfect EPS rating of 97.
Tri Pointe Homes was among the homebuilders making bullish moves. It is in a buy zone above a flat base of 27.80. However, the volume followed well below average.
DR Horton (DHI) was another strong performer from this industry group. So much so that it was named IBD Stock Of The Day for Tuesday.
Follow Michael Larkin on Twitter at @IBD_MLarkin for more growth stock analysis.
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