The Dow Jones Industrial Average briefly rallied 150 points Tuesday to hit another record high before reversing lower, as the House approved $2,000 stimulus checks. Apple stock is trying to break out past a new buy point, while Tesla is on pace to add to a win streak.
Tesla (TSLA) looked to add to a three-day win streak, rising 0.2% in early trade.
Apple, Generac, Microsoft and Tesla are all IBD Leaderboard stocks. Alphabet, Generac and Intuitive Surgical were featured in this week’s Stocks Near A Buy Zone column. Epam was Thursday’s IBD Stock Of The Day.
Dow Jones Today: Stimulus Checks
On Tuesday, the Dow Jones Industrial Average reversed lower to fall 0.1%, while the S&P 500 cut early gains to 0.1%. The tech-heavy Nasdaq composite moved down almost 0.1% after reversing lower. All three major stock indexes briefly touched record highs.
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 43.8% for the year through Monday’s close. The S&P 500 is up 15.6%, while the DJIA is up 6.5% year to date.
According to the Worldometer data tracker, the cumulative number of confirmed coronavirus cases in the U.S. topped 19.7 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 81.8 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.
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: Apple Hits New Buy Point
Apple stock is trying to break out above a cup base’s 138.08 buy point, according to MarketSmith chart analysis. Shares briefly rallied over 1% Tuesday morning before cutting gains, and are 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 Monday.
Stocks In Or Near Buy Zones: Alphabet, Generac, Intuitive Surgical, Epam
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 advanced 0.5% Tuesday and are squarely in buy range. The buy zone goes up to 1,812.51.
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 are looking to snap a three-day losing streak with a 0.9% gain Tuesday morning.
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 rose 0.2% Tuesday morning 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 rose 0.2% Tuesday morning, on pace to add to a three-day win streak. 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% from the buy point.
Dow Jones Leaders: Microsoft
Among the top Dow Jones stocks, software giant Microsoft moved up 0.3% Tuesday, as shares continue to move further above their key 50-day line. Shares are approaching 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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