U.S. stock indexes traded in a narrow range Wednesday afternoon as the market awaited the final number on second quarter GDP.
The Nasdaq inched up 0.1%, while the S&P 500 and the blue chip Dow Jones industrial average rose 0.4% and 0.5% respectively. Volume was running slightly higher on both major exchanges in the stock market today.
Q2 GDP will be released before Thursday's open. Analysts expect an upward revision to 1.3%. The first and second takes on economic growth came in at 1.2% and most recently 1.1%. The range of estimates for the final number runs from 1.1% to 1.5%.
Fast-food chain Sonic (SONC) gapped down 7% on weak guidance. Volume was about 500% above average. Despite the ugly move, Sonic found support near the 25 price level. In February, Sonic found support at that same price area. Sonic ran up about 45% from February to early April, but has since pulled 30% off the April high.
Restaurant stocks have struggled recently. Of the 61 stocks in the restaurant group, only two carry an IBD Composite Rating of 90 or better. The Composite combines all five IBD ratings into a single number. A rating of 90 means the stock ranks in the top 10 percentile of all stocks in IBD's database.
The two stocks with 90-plus ratings are Papa John's International (PZZA) at 95 and Jack in the Box (JACK) at 91. In Wednesday afternoon trade, Papa John's fell 1% in heavy volume. Jack in the Box dropped 1.5%, down for a third straight day.
Meanwhile, blue chip winners and losers were about evenly split Wednesday afternoon. The top gainer was Caterpillar (CAT). The stock broke out of a flat, base-on-base pattern in strong volume. Caterpillar was up 3%, crossing above a 84.83 buy point.
In the IBD 50, a list of the best stocks in fundamentals and technicals, Worthington Industries (WOR) also broke out. The maker of metal products and cryogenic containers cleared a 45.78 buy point in volume more than twice its usual pace. Worthington's pattern also was a base on base.
A base on base involves a second pattern with lows settling at the previous pattern's highs. The first pattern's decline is often tied to weakness in the general market. When the second breakout works, it's often tied to a strengthening general market.
IBD's Take: Although restaurant stocks are struggling, some IPOs are showing bullish action.
Initial public offerings were showing good action, which is another good sign for the general market. August IPO and embedded antennae designer Airgain (AIRG) advanced 6%, touching a new high.
July initial public offering TPI Composites (TPIC) scored a new high with a 3% pop. The charts of Airgain and TPI both have a straight-up look.
May IPO Acacia Communications (ACIA) fell 2% but the stock has formed a somewhat imperfect high tight flag pattern. A high tight flag can be a very bullish pattern. First, the stock rises 100% to 120% in four to eight weeks, which Acacia did. Then the stock corrects 10% to 20% in three to five weeks, which Acacia did with a 22% correction, slightly more than ideal. If the stock can break past 128.83 in heavy volume, Acacia could provide an entry.
Other highly rated stocks posting solid gains Wednesday included Amazon.com (AMZN), up 1.5%; uniform maker Cintas (CTAS), up 2.5%; and RV maker Thor Industries (THO), up 0.5%. Thor and Amazon both marked new intraday highs.
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