Nasdaq Lags This Dow Stock Just Broke Out; When To Buy This Hot Bitcoin ETF

Stocks continued to shine on the third day of trading in 2018, and this time the Nasdaq lagged.

X Following gains of 1.5% and 0.8% on Tuesday and Wednesday, the tech-rich Nasdaq composite rallied around 0.2%, backing off intraday highs. Yet the leading index of 2017 (up more than 28% that year) still looks poised to hold firmly above the 7000 level.

Meanwhile, DowDuPont (DWDP) is giving large-cap investors a chance to time their new buy wisely as the chemicals giant broke out Thursday, rising out of a nearly 10-week flat base that shows a 73.95 buy point. Shares rose 2.1% to 74.60, helping the Dow Jones industrials rise 0.7%. The S&P 500 is up 0.5%.

For a flat base, simply add 10 cents to the base's left-side high, or in DowDuPont's case, 73.85. DowDuPont corrected less than 8% within the base from intraday high to low, falling nicely within the maximum 15% decline threshold.

Volume in DowDuPont, a fundamentals turnaround play not too unlike Apple's (AAPL) situation in 2016-2017, is running mildly above average. For a big or megacap stock, you'd prefer to see volume run 40% above the 50-day average or higher. However, in some cases, huge turnover doesn't come in until days or even weeks after the breakout itself.

Also notice on a daily chart how turnover has definitely heated up compared with the dull volume days during the last two weeks of December.

Analysts see DowDuPont's earnings up just 1% in 2017 to $3.22 a share, but then surge 25% to $4.03 a share, which would be the highest earnings since at least 2008. Total sales rose 36% in 2016 to $66.18 billion.

Elsewhere, highflying Bitcoin ETF, Bitcoin Investment Trust (GBTC) is cooling its heels after stupendous gains in December. The ETF fell just 2.5% to 2,199 in ultra-light trade. Average volume has recently expanded to 133,000 shares, so the dollar volume is ample for most traders.

At this point, following a hyperbolic run last month and a elevator-like plunge over just four sessions, quiet trading is a welcome change. But at the current price level, the risk of losing money on a new buy is likely higher than normal. Why? Bitcoin Investment has not corrected long enough to produce a genuine new chart pattern that can maximize short-term gain and minimize losses.

Over the next several weeks, keep tracking the price movement. Does it hold above its fast-rising 50-day moving average? Will it form a bullish new base such as a cup or double bottom? Or do big sellers come in strong again? Only time will tell.

Some commentators believe the strength of Bitcoin is bullish for gold. Gold-related ETFs are doing well so far this year.

The SPDR Gold Shares (GLD) investment trust rose more than 0.5% to 125.61 in light trading. A new base has been forming since the large-cap ETF topped at 128.32 in September. SPDR Gold is now less than 3% below that peak.

The current base has elements of a double bottom, which would give a 124.07 entry, 10 cents above the Oct. 16 middle peak of 123.97.

Airlines have been rising in recent months, but strength in crude oil futures lately may serve as a stiff headwind. American Airlines (AAL) tried to break out of an 11-week cup with handle that features a 53.57 buy point. But shares, after hitting as high as 54.40 intraday, shaved its gain to less than 0.7% at 52.71. Plus, volume is limp.

Southwest Air (LUV), part of IBD Leaderboard, is down slightly. At 64.62, it's extended from a proper buy point, after having broken out past 59.99 in a large cup with handle.

According to IBD Stock Checkup, Southwest has one of the best Composite Ratings among the U.S. companies within IBD's Transport-Airline industry group at 81 on a scale of 1 to 99.

The Dow transportation average rallied 0.4%. At 10,863, the sector index is up nearly 2.4% since Jan. 1.

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