After peaking at 32,009 just two weeks ago, the Dow Jones industrial average rose more than 1,460 points or 4.5%. But it tries to bounce the session lower. Stocks are being hammered today by confusion over comments on the financial markets by the head of the US central bank.
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Bitcoin, which recently surpassed $ 52,000, fell more than 4% to $ 43,038. Ethereum, another digital currency that is growing in popularity, fell nearly 3.7%.
Jerome Powell, chairman of the Federal Reserve, noted that he was concerned about possible financial market disruption, but that he did not suggest it was time to immediately reconsider the policy regarding the cost of borrowing.
“There is a growing concern that the Fed’s economy may disappear. While the thought of rapid change may be enough to scare off investors now, we see higher inflation as a long-term positive for the market,” said Lindsey Bell, chief investment officer. . strategist from Ally Invest, commented in an email sent to IBD. “We are still seeing historically low levels of inflation, so it will take a lot of change to get inflation out of control. If you are worried about inflation, your portfolio can be protected.”
Powell and other Fed board governors are expected to meet Tuesday and Wednesday at the next FOMC meeting.
At one point on the CBO, the yield on the standard bond of the U.S. Treasury for ten years reached 1.55%.
It rose sharply by 0.93% at the beginning of 2021.
Beyond Dow Jones
Meanwhile, new outbreaks were rapidly gaining ground.
Avient (AVNT), a recent showcase in the IBD Stock Of The Day, turned around badly after clearing a real buy point of 46.48 in a seven-week cup pattern on Wednesday.
The member of the IBD group for plastics industries, Avient, specializes in color, polymer and additive ingredients. In the fourth quarter, thanks in large part to a major acquisition, the Avon Lake, Ohio-based company achieved a 53% increase in fourth-quarter earnings to 52 cents a share, with a 51% increase in sales to $ 997 million.
Avient remains above technical levels, including the exponential moving average of 21 days.
Broad-based profit-taking
At the low of Thursday 30,547, the blue chip Dow fell to 2.3% and cut below the critical moving average of 50 days. The Dow industrials tried to reduce the serious losses in the last hour of trading, and fell 1.2% around 15:05. The Nasdaq hit harder and fell by about 2%; the S&P 500 slipped almost 1.3%.
Small capitals are also suffocated by sellers; iShares Russell 2000 (IWM) fell more than 3% at one point and cut its first moving average for 50 days since the end of October. The exchange-traded fund of the Innovator IBD Breakout Opportunities (BOUT) fell by 6.1%.
In a healthy market, major stock indices trade above their 50 day lines – which determine the average closing price of a stock or index over the past 50 trading sessions – and lead it higher.
On February 25, IBD conducted a downward review of the current outlook for equities.
A new rally for energy?
Meanwhile, the decision of OPEC and Russia to extend the current cut in oil production until April has enriched the commodity. Intermediate futures in West Texas rose 3.6% to $ 63.53 a barrel, extending a year-on-year gain to nearly 31%.
Oil exploration firms caught the clumsy news. Dow industrial component Chevron (CVX), Diamondback Energy (FANG) en Matador Resources (MTDR) all rose.
The trio is currently on the watch list of the best stocks on IBD Live.
Chevron recently cleared resistance near 95 and has risen excellently.
Note how the relative strength line has risen sharply since early February. This means that the megacap energy supply did the S&P 500 better than the best.
More specifically, Chevron surpassed a 95.92 buy point in a long deep bottom base. From November to early January, CVX formed a mediocre handle with an intraday high of 95.82. Add 10 cents to the highest price in the handle to find the right buy point.
The outbreak attempt on January 14 sparked. But Chevron formed a second handle, and this one had less off days in heavy volume.
A new buying point at 96.41 has emerged. CVX achieved 11.5% with this new pivot point.
Matador Resources: In Bull Run Mode
Matador was extended after rushing past a 13.94 entry in a long, deep cup with handle in early January. The childhood has not yet tested its ten-week moving average; the first and second setbacks of the 10-week line may provide a follow-up point, but the success is higher if the market is in a confirmed upward trend.
Analysts polled by FactSet expect the Dallas oil and gas explorer to increase its earnings by 222% this year to $ 1.77 per share and another 34% in 2022.
in 2020, Matador’s earnings fell 54% to 55 cents a share. According to IBD Stock Checkup, this had an effect on its earnings per share, which is now a 48.
More growth stocks to watch
Meanwhile, the shares in the MarketSmith Growth 250 that achieved the sale on Thursday include multimedia content provider Discovery (DISCA), First Republic Bank (FRC), Callon Petroleum (CPE) and comfortable clothing chain American Eagle Outfitters (AEO).
Follow Chung on Twitter: @saitochung and @IBD_DChung
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