The Dow Jones Industrial Average briefly tumbled more than 400 points on fears of a new coronavirus strain early Monday. Tesla skidded over 5% in its S&P 500 debut. Nike briefly jumped 7% on strong earnings, while Apple declined nearly 2% in morning trade.
Tesla (TSLA) skidded 5%, falling from Friday’s record high. The company was added to the S&P 500 index today.
Dow Jones Today: New Coronavirus Strain
On Monday, the Dow Jones Industrial Average fell 1.1%, while the S&P 500 declined 1.7%. The tech-heavy Nasdaq composite lost 1.6% in morning trade.
On Saturday, U.K. Prime Minister Boris Johnson closed all non-essential businesses through Dec. 30 in London and Southeast England. Johnson cited a new, more-infectious Covid-19 strain that U.K. experts say is helping to fuel a surge in London-area cases. European nations and several other countries, like Canada, suspended travel to and from the U.K. over the new coronavirus strain.
Amid the coronavirus stock market rally, the tech-heavy Nasdaq is up 42.2% for the year through Friday’s close. The S&P 500 is up 14.8%, while the DJIA is up 5.7% year to date, through the Dec. 18 close.
On Sunday, Senate Majority Leader Mitch McConnell announced that the Senate and House finalized a stimulus package for $900 billion. The deal provides fresh extra jobless benefits, along with $600 in direct checks to adult Americans, more funding for small business loans, $15 billion to airlines and more.
The House and Senate are set to vote on Monday.
According to the Worldometer data tracker, the cumulative number of confirmed coronavirus cases in the U.S. topped 18.2 million on Monday. Total virus-related deaths rose past 324,000.
The cumulative total of worldwide Covid-19 cases confirmed since the start of the outbreak topped 77.2 million Monday, with more than 1.7 million virus-related deaths.
Coronavirus Stock Market Rally
November was a key month for the stock market, after IBD’s The Big Picture flagged a new uptrend following the market’s bullish follow-through day on Nov. 4. Meanwhile, December sees the stock market near record highs, with the Nasdaq already setting more all-time highs.
Friday’s Big Picture commented, “The stock market looked poised for a rough close Friday, but some late-session buying lifted the major averages well off session lows. Buyers came in late as Congress continued to negotiate a $900 billion coronavirus stimulus package.”
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
Nice is extended past a flat base’s 255.58 buy point following a Dec. 16 breakout. Intuit is out of the 5% buy zone above a 354.08 buy point in a cup with handle.
Dow Jones Stocks To Watch: Nike Earnings
Nike jumped 7% after reporting strong quarterly earnings and sales results. Meanwhile, Nike brand digital sales jumped 84% in fiscal Q2, accelerating from a 82% surge in Q1 and 75% growth in fiscal Q4. The company has set a goal to push online sales to 50% of total sales “in the foreseeable future.”
Shares hit a new high in Monday morning trade.
The blue chip giant is the No. 4-performing Dow Jones stock for 2020, with a 35.5% advance through Friday.
Stocks In Or Near Buy Zones: Chegg, Lululemon
Friday’s IBD Stock Of The Day, Chegg, is trading just below a 90.09 buy point in a cup base. Shares rose 0.1% in morning trade.
Last week, Lululemon broke out above a cup-with-handle’s 383.64 buy point. But shares gave up the entry on Friday. LULU stock moved down almost 1% Monday morning.
A flaw is the stock’s lagging relative strength line. The RS line remains far from its old highs. Ideally, the RS line should hit a new high on or around the breakout day to confirm the breakout’s strength
According to IBD Stock Checkup, Lululemon stock shows a 96 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.
IBD Leaderboard stock Tesla tumbled 5% early Monday, giving up a large amount of Friday’s 6% surge.
The company was added to the S&P 500 index Monday morning. Tesla will make up 1.69% of the S&P 500 index as it makes its debut on Monday, S&P Dow Jones Indices analyst Howard Silverblatt told CNBC. For every $11.11 moved in Tesla, the S&P 500 changes 1 point.
On Nov. 18, shares broke out above a 466 buy point in a cup with handle and are about 45% from the buy point. On Friday, shares of the electric-auto giant hit an all-time high at 695.00.
Dow Jones Leaders: Apple, Microsoft
Among the top Dow Jones stocks, Apple is trying to hold above an aggressive entry at 125.49 amid Monday’s 1.9% fall. Shares remain below the conventional buy point, which is at 138.08, according to MarketSmith chart analysis.
The blue chip giant is the No. 1-performing Dow Jones stock for 2020, with a 72.5% advance through Friday.
Software giant Microsoft moved down 0.2% Monday, as shares looked to move further above their key 50-day line.
Year to date, Microsoft is one of the top Dow Jones stocks, advancing 38.6% through the Dec. 18 close.
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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