The Dow Jones Industrial Average jumped 275 points Monday, after the FDA approved the Pfizer coronavirus vaccine on Friday. Tesla rebounded amid an email from CEO Elon Musk, while Nio tumbled as it priced its secondary offering. Virgin Galactic plunged on an aborted test flight.
Dow Jones Today: Pfizer Coronavirus Vaccine
On Monday, the Dow Jones Industrial Average jumped 0.9%, while the S&P 500 was up 0.9%. The tech-heavy Nasdaq composite advanced 1.2% in morning trade.
Meanwhile, an FDA panel will review the Moderna (MRNA) coronavirus vaccine on Thursday. Late Friday, Moderna said the U.S. agreed to buy another 100 million vaccine doses. Moderna stock jumped 1.9% and is about 10% off its 52-week high.
Amid the coronavirus stock market rally, the tech-heavy Nasdaq is up 38.0% for the year through Friday’s close. The S&P 500 is up 13.4%, while the DJIA is up 5.3% year to date, through the Dec. 11 close.
According to the Worldometer data tracker, the cumulative number of confirmed coronavirus cases in the U.S. topped 16.7 million on Monday. Total virus-related deaths rose past 306,000.
The cumulative total of worldwide Covid-19 cases confirmed since the start of the outbreak topped 72.7 million Monday, with more than 1.62 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.
Friday’s Big Picture recapped, “The past week, the Nasdaq and S&P 500 added one distribution day — on Wednesday — but further weakness has yet to materialize. In fact, the Nasdaq looked to head sharply lower Thursday and again Friday, but was able to rebound and close near session highs on both days. The Nasdaq’s close on Friday was above Wednesday’s close.”
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.
Nice is finding support around it 10-week moving average line and is just above a 238.45 buy point in a flat base. Meanwhile, a new flat base offers a new buy point at 255.58. Intuit is in the 5% buy zone above a 354.08 buy point in a cup with handle.
Dow Jones Stocks: Apple Tests Buy Point
Apple is trying to break out above another aggressive entry at 125.49, while it tests an early buy point at 122.09. Shares moved up 0.4% early Monday.
The conventional buy point, for now, is 138.08, according to MarketSmith chart analysis.
The blue-chip giant is the No. 1-performing Dow Jones stock for 2020, with a 66.7% advance through Friday.
Stocks In Or Near Buy Zones: Chipotle, EXP World
According to IBD Stock Checkup, CMG stock shows a mild 70 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.
Thursday’s IBD Stock Of The Day, EXP World, broke out past a 62.60 buy point in a cup base on Friday with a 8.6% advance. Shares ended the session out of the 5% buy zone, which tops out at 65.73. The stock gained another 2% Monday morning.
Virgin Galactic Stock
Virgin Galactic stock plunged 15% after the company aborted a powered test flight of its space plane Saturday, delaying a key step needed for Richard Branson’s space tourism company to start commercial service.
Shares are more than 35% off their 52-week high.
IBD Leaderboard stock Tesla jumped as much as 3% early Monday, briefly recovering the entirety of Friday’s nearly 3% fall. But shares trimmed gains to about 1% in morning trade.
Tesla demand is strong in the fourth quarter, but the company must boost production to capitalize, CEO Elon Musk said in an email to employees. “We are fortunate to have a high-class problem of demand being quite a bit higher than production this quarter,” Musk said in the email, obtained by pro-Tesla site Electrek.
However, Tesla will shut down Model S and Model X production at the Fremont, California, plant from Dec. 24-Jan. 11, according to a company email Friday obtained by CNBC.
Meanwhile, the company will be added to the S&P 500 index on Dec. 21.
On Nov. 18, shares broke out above a 466 buy point in an awkward cup with handle and are about 30% from the buy point. Last week, shares of the electric-auto giant hit an all-time high at 654.32.
Nio Stock Tumbles On Priced Share Offering
Tesla rival Nio tumbled over 5% early Monday after expanding its stock offering by eight million shares, while pricing the offering at a discount.
Nio raised the offering from 60 million to 68 million shares. The secondary priced at 39, about 7% lower than Friday’s closing price of 41.98.
Shares are approaching their 50-day moving average line, a key support level. A strong rebound from this level would offer a new buying opportunity. Nio stock is 30% off its 52-week high.
Dow Jones Leaders: Microsoft
Among the top Dow Jones stocks, software giant Microsoft moved up 0.6% Monday. Shares are trying to move back above their 50-day line.
Year to date, Microsoft is one of the top Dow Jones stocks, advancing 35.2% through the Dec. 11 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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