Technical stocks bounced back quickly on Tuesday as the Nasdaq regained some of Monday’s losses and the Dow Industries and Russell 2000 each had a third straight lead. Bitcoin rose higher, raising the IBD 50 and Leaderboard stock PayPal Holdings. Meanwhile, Microsoft, Salesforce.com and Apple have led the technology to run hot on the Dow Jones today.
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The Nasdaq Composite outperformed the stock market with an early lead of 3% just outside the starting gate Tesla (TSLA) and Baidu (BIDU) trades at the top of the list. The Dow Jones industrial average posted a 0.5% gain as financial accounts weighed in early trading.
The S&P 500 tuned in with an advance of 1.4%. Tesla en Enphase Energy (ENPH) rose at the top of the index, by 6% and 7.2% respectively.
The recovery of the chip shares resulted in part of Tuesday’s early action, with manufacturers of electric vehicles and names in China booming in early trade. Monolithic Power (MPWR) and Cree (CREE) led the Philadelphia Semiconductor Index in early trading. The VanEck Vectors Semiconductor ETF (SMH) rose 3.4% in early trading, after falling 5.5 on Monday.
Westlake Chemical (WLK) will be a stock to watch today and will lose 1.5% early action after a break above a 90.46 buying point on Monday. Westlake was the IBD’s Stock of the Day on Monday.
It was not a good morning for earnings Dick’s Sporting Goods (DKS) by 6% lower, and Thor Industries (THO) increases a fraction to its quarterly results. StitchFix (SFIX) suffered more severe damage, by almost 25% lower after mixed fiscal results were reported in the second quarter.
Dow Jones Today: Microsoft Eyes Buy Point
Technical names ruled upside down on the Dow Jones today, with appeal (AAPL), Microsoft (MSFT), Salesforce.com (CRM) and Intel (INTC) leading the charge.
A 4.2% drop on Monday left Apple’s share in its first support test at its 200-day / 40-week moving average since a strong undercutting of the line in March. Support here may indicate that the stock is starting to form a possible base pattern, but the level is much less than the drop below 112.38 that would be needed to restore Apple’s base position. Apple shares rose 2.5% early Tuesday.
Microsoft tampered with support, as well as a buying point at 232.96. The stock rose 2.4% early Tuesday, trading just a fraction below the buy point.
China, gathering of the name of the sun
China-based Baidu (BIDU) traded at the top of the Nasdaq, up 7.9% in early trading. The stock ended 34% below its record high of February 22 on Monday.
Daqo new energy (DQ), which is also based in China, rose 16% after its report in the fourth quarter, leading the recovery of solar issues. Canadian solar power (CSIQ) 6% higher bolted. Enphase Energy (ENPH) rose 7%, and Solar works (SUNW) jumped more than 10%. First solar power (FSLR) assisted 3.5%, SolarEdge Technologies (SEDG) achieved more than 8% per piece.
IBD 50 stock Generac Holdings (GNRC) jumped 5.2% and started a setback from its 50-day / ten-week line.
EV Makers Report February China Sales
Manufacturers of electric vehicles also began to rise rapidly, with sales reports from the China Passenger Car Association in February possibly improving early results. A total of 97,000 electric cars and plug-in hybrids were sold in China in February, the CPCA said. This was an increase of 675% compared to the previous year, but by almost 38% from January – mainly due to the country’s week-long lunar New Year celebration.
Tesla delivered 18,300 vehicles in China in February, up 15.5% from January. The Tesla share is down 37% from its peak on 25 January. Among China-based EV manufacturers, Spend (XPEV) achieved 6.4%, Li Auto (LI) scratched 5% higher, and Nine (NIO) increased by 5.5%.
Stimulus on course; Effects bounce, returns ease
In Washington, the $ 1.9 billion massive federal stimulus project continued, with House lawmakers already planning a final vote Tuesday night before submitting the bill to President Joe Biden for a signature. The Senate approved the bill on Saturday, with the president urging it to pass before supplementary unemployment benefits expire on Sunday.
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Bonds bounced early Tuesday, dropping 5-year yields by 5 basis points to 1.54%. Returns reached an intraday high of 1.61% on Monday. It is still below the 1.8% levels at the beginning of 2020, which was lower than about 2.7% a year earlier. But the rate at which yields climbed, sharply against lows of around 0.5% in August, raised a warning flag over markets.
Small cap, Blue Chip Rebound
Small-cap capitalization pointed the middle ground amid Tuesday’s early rise, with the Russell 2000 rise of 1.1%. Shares of genetic testing provider Invitae (NVTA) rose more than 10% in early trading, after Cathie Wood of ARK Investment Management named the company as a leader in molecular testing, in a CNBC interview late Monday.
GameStop (GME) vaulted 15% and made a daily advance on fifth consecutive time as the r / WallStreetBets target continued its three-week setback.
The Russell 2000 rose 2.1% on Friday and fell sharply with the Nasdaq, Dow industrials and S&P 500. Unlike the Nasdaq and S&P 500, the Dow and the Russell also recovered from 10-week / 50-day support as institutions kept their commitment in the small and blue chips of the market while technology and growth stocks cut support lower.
Bitcoin, PayPal Climb
Bitcoin rose higher and, according to CoinDesk, held above $ 54,000. The crypto-currency climbed to a record high of $ 58,000 on January 21st.
Among Bitcoin-related stocks, Marathon Patent Group (MARA) recovered by 19.5%, while MicroStrategy (MSTR) traded more than 14% higher. The Amplify Transformational Data Sharing ETF (BLOCK) added 7.1%.
IBD Leaderboard stock PayPal Holdings (PYPL) strengthened its early profit to 6.3%, ending a five-day decline. PayPal shares have been affected by the price changes of Bitcoin since October, when the company launched a cryptocurrency trading service that trades on Bitcoin. The company on Monday announced the acquisition of the Israeli CURV to strengthen its cryptocurrency security. Terms were not disclosed.
PayPal reduced a profit of 48% from an outbreak in October to less than 10%. In the process, it broke strongly below the support against its moving average of ten weeks last week. Both are selling signals. The stock should now form a proper base.
Applied materials, Micron Find support
Among leading slide stocks, many leaders are busy forming possible base patterns. IBD 50 stock Applied materials (AMAT) increased by 3.6%. Micron Technology (MU) climbed 3.5%, implying a possible setback of support. The current “market in correction” status indicates that investors should wait for a status change before making new purchases or adding positions.
Lamb research (LRCX), with 7.2% higher, forms a rising base pattern with a buying point of 603.70.
Dow Jones shares to watch today: Caterpillar, UnitedHealth
Ruspe (CAT) slipped 1.6%, threatening the sixth week of its advance since a setback in February due to ten-week support. Goldman Sachs (GS) fell 1.6%, also in the sixth week of a February upturn, just below its peak on March 3 and kept support at its 21-day moving average.
JPMorgan (JPM) is just outside the buying range after clearing a handle point at 142.85.
UnitedHealth Group (UNH) rose 2.7% as it climbed to the right of an eight-week cup base with a buying point of 367.59.
Specialist chemicals manufacturer Dow (DOW) fell 1.8% and traded in a buy range after regaining a 58.28 buy point on 19 February.
Find Alan R. Elliott on Twitter @IBD_Aelliott
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