The Dow Jones Industrial Average briefly slid more than 575 points after reversing lower Monday to start the first trading session of 2020. Apple stock remains within striking distance of its new buy point. Chinese EV makers Li Auto, Nio and Xpeng Motors jumped on strong sales, while Tesla raced to all-time highs.
Tesla (TSLA) hit another record high Monday, rising 5%. Chinese rival Nio (NIO) jumped 11%, adding to last week’s rebound from a critical support level. Meanwhile, fellow Chinese EV makers Li Auto (LI) and Xpeng Motors (XPEV) also soared.
Dow Jones Today
On Monday, the Dow Jones Industrial Average was down 1.6%, while the S&P 500 fell 1.4%. The tech-heavy Nasdaq composite moved down 1.2% in midday trade.
U.S. Stock Market Today Overview
Last Update: 10:46 AM ET 1/4/2021
Amid the coronavirus stock market rally, the tech-heavy Nasdaq ended 2020 up 43.6%, its best year since 2009. The S&P 500 was up 16.3%, while the DJIA was up 7.2% year to date.
According to the Worldometer data tracker, the cumulative number of confirmed coronavirus cases in the U.S. topped 21.1 million on Monday. Total virus-related deaths rose past 360,000.
The cumulative total of worldwide Covid-19 cases confirmed since the start of the outbreak topped 85.5 million Monday, with more than 1.85 million virus-related deaths.
Coronavirus Stock Market Rally
Looking back at the current uptrend, November was a key month for the stock market. IBD’s The Big Picture flagged the new uptrend following the market’s bullish follow-through day on Nov. 4. Meanwhile, 2021 kicks off with stocks just off all-time highs. Be sure to check out IBD’s Stock Market Outlook for 2021.
Thursday’s Big Picture commented, “2020 is a key example of the importance of tuning out the daily news to focus on the price and volume action of the stock indexes and top growth stocks. Despite the coronavirus pandemic — which caused lockdowns and massive unemployment — the Nasdaq composite advanced 43.6%, its best year since 2009 when it surged 43.9% in the aftermath of the financial crisis.”
Investors should continue to use the stock market’s strength to buy breakouts. Be patient and wait for powerful breakouts instead of chasing extended stocks. If the new breakouts work, then add more exposure. But if breakouts start to fail, then you can back away.
In particular, focus on stocks with strong relative strength. Find them by using the relative strength line. The RS line measures a stock’s price performance vs. the S&P 500. If the stock is outperforming the broader market, then the RS line angles upward. If a stock is performing worse than the broad market, then the line will point lower.
Stocks To Watch: IBD Long-Term Leaders
Stocks to watch include IBD Long-Term Leaders, companies with stable earnings growth and price performance. Veeva Systems (VEEV) is the latest addition to the list, as it tries to regain its 10-week line. Shares are approaching a 314.09 buy point in a cup base.
Dow Jones Stocks To Watch: Visa In Buy Range
Shares moved down 0.8% Monday morning.
Stocks In Or Near Buy Zones: Five Below, Netflix, Pinterest
Shares dropped 1.4% Monday.
FANG stock leader Netflix fell below its 536.47 buy point in a cup with handle, according to IBD MarketSmith chart analysis. The 5% buy zone goes up to 563.29. Shares slid 2% Monday morning to give up the entry.
A real flaw is the stock’s lagging RS line. It remains far from its old highs when it should be at or near new highs.
Thursday’s IBD Stock Of The Day, Pinterest, pulled back to its 10-week moving average line where it is searching for support. A rebound from that key level would offer a buying opportunity. Shares dropped 0.8% Monday morning.
According to IBD Stock Checkup, Pinterest shows an 89 out of a perfect 99 IBD Composite Rating. The Composite Rating — an easy way to identify top growth stocks — is a blend of key fundamental and technical metrics to help investors gauge a stock’s strengths.
Chinese EV Makers: Li Auto, Nio, Xpeng
Li Auto sales hit 6,126 in December, up 31.9% vs November. Shares jumped 14% and are trying to regain their 50-day moving average line. The stock is about 35% off its 52-week high.
Nio sales in December rose to 7,007, up 32.4% vs. November and 121% vs. a year earlier. Full-year sales reached 43,728. Shares surged 11% and are about 6% off their 52-week high, as a new base continues to take shape. Last week, shares found support at their 50-day line.
Xpeng reported December sales of 5,700, up 35% vs. November and 326% a year earlier. The stock advanced 10% and is rebounding from its 50-day line after a sharp fall.
IBD Leaderboard stock Tesla hit a record high on Monday morning, surging more than 5%. Early Monday, Tesla stock hit a fresh record at 744.48. Over the weekend, the company reported fourth-quarter deliveries and production figures, with deliveries nearly hitting the 500,000 full-year target.
Tesla was a star of 2020, soaring 743% for the year. The stock showed multiple buy points during the year, including a 174.06 cup-with-handle entry and a 466 buy point in another cup with handle.
Shares are more than 50% from the 466 buy point.
Dow Jones Leaders: Apple, Microsoft
Among the top Dow Jones stocks, Apple stock is trying to break out above a cup base’s 138.08 buy point, according to MarketSmith chart analysis. Shares briefly hit the new buy point on Dec. 29 before retreating. Shares are just under the new buy point amid Monday’s 1.2% loss.
In recent weeks, Apple shares have moved above aggressive entries at 125.49 and 122.09.
Apple is an IBD Leaderboard stock. Per Leaderboard commentary, “The alternate entry is in the lower half of the base but the RS line is improving. Apple nearly doubled from its breakout in April and will be tough to replicate that run. The base is third stage, which is a reason to have lower expectations this time around.”
The blue-chip giant was the No. 1-performing Dow Jones stock in 2020, with an 80.8% advance.
Software giant Microsoft moved down 1.4% Monday, as shares continue to approach a 228.22 buy point.
Be sure to follow Scott Lehtonen on Twitter at @IBD_SLehtonen for more on growth stocks and the Dow Jones Industrial Average.
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