Dow Jones futures, along with S&P 500 futures and Nasdaq 100 futures, rallied late Tuesday, as Treasury Secretary Mnuchin tweeted that stimulus checks will start to go out tonight. The stock market rally hit a roadblock Tuesday, reversing from record highs, as Senate Majority Leader Mitch McConnell blocked efforts to increase stimulus checks. Apple stock briefly hit a new buy point before reversing sharply lower.
The Dow Jones Industrial Average fell 0.2%, or 68 points, while the S&P 500 also slipped 0.2%. The tech-heavy Nasdaq composite moved down 0.4%. All three major stock indexes reversed from record highs Tuesday.
Chinese stocks showed strong action Tuesday. Alibaba (BABA) snapped back 6.25%, while JD.com (JD) regained a key level. Tesla rival Nio (NIO) rebounded from a critical support level. IBD Leaderboard stock Pinduoduo (PDD) surged 15.6%.
Dow Jones Futures Today: Stimulus Checks
Late Tuesday, Dow Jones futures and S&P 500 futures rose 0.1% vs fair value. Nasdaq 100 futures were up about 0.1% vs. fair value. Remember that trading in Dow Jones futures and elsewhere doesn’t necessarily translate into actual trading in the next regular stock market session.
Tuesday evening, Treasury Secretary Steven Mnuchin tweeted that $600 stimulus payments will start going out tonight. Paper checks will be mailed starting Wednesday. Meanwhile, the battle for $2,000 stimulus checks continues in the Senate.
Midday Tuesday, Senate Majority Leader Mitch McConnell blocked Senate Minority Leader Chuck Schumer’s unanimous consent attempt to increase stimulus checks from $600 to $2,000. Schumer had called for the Senate to give unanimous consent to increase the stimulus checks, but McConnell objected. The Senate needs unanimous support to move rapidly on most issues.
McConnell expressed support for the new measure but left it unclear how to proceed, suggesting that election integrity and other measures may be part of a package.
On Monday, the House voted to increase the second round of direct payments from $600 to $2,000, in line with President Donald Trump’s call for more money to the American people. It is unclear if the Senate will vote on the House bill.
Amid the coronavirus stock market rally, the tech-heavy Nasdaq is up 42.7% for the year through Monday’s close. The S&P 500 is up 14.1%, while the DJIA is up 5.2% year to date.
U.S. Stock Market Today Overview
Last Update: 5:28 PM ET 12/29/2020
According to the Worldometer data tracker, the cumulative number of confirmed coronavirus cases in the U.S. topped 19.8 million on Tuesday. Total virus-related deaths rose past 343,000.
The cumulative total of worldwide Covid-19 cases confirmed since the start of the outbreak topped 82 million Tuesday, with more than 1.78 million virus-related deaths.
Coronavirus Stock Market Rally
November was a key month for the stock market. 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 at record highs.
Monday’s Big Picture cautioned, “The final week of 2020 began with stock market indexes making record highs, all but ensuring the Nasdaq composite will end 2020 with one of its five largest annual gains. But Monday’s gains masked weakness in leading stocks and small caps.”
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.
Dow Jones Stocks To Watch: Visa
Visa rallied nearly 1% Tuesday, inching closer to a 217.75 buy point in a flat base, according to IBD MarketSmith chart analysis.
The blue chip giant is the No. 11-performing Dow Jones stock for 2020, with a 14.2% advance through Tuesday.
Chinese Stocks Outperform; Nio Finds Key Support
Alibaba snapped back 6.25% Tuesday, but remains more than 25% off its 52-week high following Friday’s 13.3% plunge.
JD.com continues to form a new base, as it regains its 50-day moving average line. For now, the new buy point is 92.87.
Tesla rival Nio rebounded from its 50-day support level, racing nearly 5% higher.
IBD Leaderboard stock Pinduoduo surged 15.6% to hit an all-time high.
Tech Giants Alphabet, Amazon.com, Netflix Lead
FANG stock leader Alphabet continues to rebound after a successful test of the 50-day line on Dec. 21. Shares are also in the 5% buy zone above a 1,726.20 buy point in a cup base following a Nov. 4 breakout.
Shares slipped 0.9% Tuesday, but are still squarely in buy range. The buy zone goes up to 1,812.51.
Amazon.com shrugged off the stock market weakness to rally 1.2% Tuesday. The stock added to Monday’s 3.5% advance. Shares are approaching a conventional buy point at 3,552.35; They are also approaching an early entry at 3,496.34
Amazon is a recent addition to IBD SwingTrader.
Netflix briefly topped a 536.47 buy point in a cup with handle Tuesday, closing just below the entry. Shares rallied 2.3%.
A real flaw is the stock’s lagging relative strength line. It remains far from its old highs despite rising in recent weeks. The RS line measures a stock’s price performance vs. the general market. It is the blue line on every IBD chart.
Stocks In Or Near Buy Zones: Epam Systems, Generac, Intuitive Surgical
Per Leaderboard commentary, “The stock consolidated in an orderly fashion for more than five weeks, resulting in the new base. It is a third-stage pattern, so it may not be as successful as earlier bases.”
Robotic surgery leader Intuitive Surgical remains in the 5% buy zone above a 792.64 entry point in a flat base following a Dec. 22 breakout. The 5% buy zone goes up to 832.27. Shares snapped a three-day losing streak with a 1.1% gain Tuesday.
Bullishly, the stock’s RS line hit a new high on the breakout day, confirming the strength of the breakout.
Thursday’s IBD Stock Of The Day, Epam Systems, is right below a 357.08 buy point in a flat base. Shares slipped 0.5% Tuesday and are just below the buy point.
According to IBD Stock Checkup, EPAM stock shows a 95 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 extended a win streak to four sessions Tuesday with a 0.35% gain. On Dec. 18, Tesla stock hit a record high at 695 and is about 4% off that all-time high.
On Nov. 18, shares broke out above a 466 buy point in a cup with handle and are more than 40% above the buy point.
Dow Jones Leaders: Apple, Microsoft
Dow Jones leader Apple stock is trying to break out above a cup base’s 138.08 buy point, according to MarketSmith chart analysis. Shares briefly surpassed the buy point Tuesday before reversing 1.3% lower. The stock ended the day below the new buy point.
In recent weeks, Apple shares have moved above aggressive entries at 125.49 and 122.09.
The blue chip giant is the No. 1-performing Dow Jones stock for 2020, with an 86.2% advance through Tuesday.
“Our headline prediction is that Apple will be the top-performing FAANG stock in 2021,” Gene Munster, managing partner at Loup Ventures, said in a blog post Tuesday. “In 2019, Apple was the top performer, and the stock is set to repeat in 2020.”
Munster added, “We believe AAPL will approach $200 (46% upside from current levels) over the next couple years.”
Software giant Microsoft moved down 0.4% Tuesday, as shares 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 futures.
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