Dow Jones Reverses Lower, As Apple Rebounds From Sell Signal; Tesla Falls From Record High

Daily Updates

The Dow Jones Industrial Average reversed lower after briefly advancing more than 150 points early Tuesday, as the stock market tried to rebound from Monday’s sell-off. Apple stock bounced after triggering a key sell rule, while Tesla slipped from record highs.


Among the Dow Jones leaders, Apple (AAPL) moved up 1.3%, while Microsoft (MSFT) gained 0.1% in today’s stock market. Visa (V) aimed toward a second straight decline after last week’s breakout gains, moving down 0.3% in morning trade.

Tesla (TSLA) slid from its record high Tuesday, falling over 1%. Tesla stock hit a record high on Monday. (JD) soared over 6% to move within striking distance of a new buy point after Stifel upgraded the stock from hold to buy. Shares are approaching a 92.87 buy point.

Stocks in or near buy zones in the current stock market rally are Nvidia (NVDA), Pinterest (PINS) and Target (TGT).

Apple, Microsoft, Target, and Tesla are IBD Leaderboard stocks. Pinterest is an IBD SwingTrader stock and was also featured in this week’s Stocks Near A Buy Zone column. Nvidia was an IBD Stock Of The Day.

Dow Jones Today

On Tuesday, the Dow Jones Industrial Average was down 0.2%, while the S&P 500 was flat. The tech-heavy Nasdaq composite moved up 0.4% after cutting early gains.

Among exchange traded funds, Innovator IBD 50 (FFTY) traded 1.6% higher Tuesday. The Nasdaq 100-linked Invesco QQQ Trust ETF (QQQ) moved up 0.6%. Meanwhile, the SPDR S&P 500 ETF (SPY) rose 0.45%.

Amid the coronavirus stock market rally, the major stock indexes are off to a rough start in 2021 after Monday’s stock market sell-off. 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 advanced 7.2%.

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Coronavirus Updates

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.

Monday’s Big Picture cautioned, “The stock market got a lousy start to 2021, as indexes dripped with losses and were left facing a technical test that could determine the market’s direction. Indexes broke the gentle uptrends they carried into the end of 2020 with sharp declines Monday. Main indexes slid more than 1% and some sector indexes fared much worse.”

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.

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Dow Jones Stocks To Watch: Visa In Buy Range

Wednesday’s IBD Stock Of The Day, Visa, is just below the 5% buy zone past a 217.75 buy point in a flat base, according to IBD MarketSmith chart analysis. The buy zone goes up to 228.64.

Shares moved down 0.2% Tuesday morning.

Stocks In Or Near Buy Zones: Nvidia, Pinterest, Target

Monday’s IBD Stock Of The Day, Nvidia, is trying to retake its key 50-day line, which has served as resistance since early December. Shares climbed 2% Tuesday morning.

The graphics-chip maker is forming the right side of a flat base with a 587.76 buy point. A real flaw is the stock’s weak RS line. Its RS line is far from its old highs, indicating sharp underperformance. The relative strength line measures a stock’s price performance vs. the broad market.

IBD SwingTrader stock Pinterest continued to rebound from its 10-week line Tuesday with a 0.2% rise.

According to IBD Stock Checkup, Pinterest stock shows a 92 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 member Target is rapidly approaching a 181.27 buy point in a flat base, according to IBD MarketSmith chart analysis. Shares rallied 0.8% Tuesday and are below the buy point.

Per Leaderboard commentary, “The previous pattern was a bit short for a flat base, unless you stretch the definition and count the 25 days since the Oct. 13 closing high. But now the stock has a legitimate flat base to work with. Shares are extended from the 10-week line. The new base is third stage.”

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Tesla Stock

IBD Leaderboard stock Tesla slipped from record highs Tuesday with a 1% loss. The stock is on pace to snap a seven-day win streak.

On Dec. 17, Tesla stock hit a record high at 744.49 and is about 4% off the all-time high. Shares climbed as much as 59.8% from a 466 buy point in a cup with handle.

Dow Jones Leaders: Apple, Microsoft

Among the top Dow Jones stocks, Apple stock is trying to rebound after triggering the 7%-8% loss-cutting rule during Monday’s sell-off. Shares fell more than 7% below a cup base’s 138.08 buy point, according to MarketSmith chart analysis.

Shares bounced 1.3% Tuesday morning. 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.”

Software giant Microsoft moved up 0.3% Tuesday, as shares continue to approach a 228.22 buy point. The stock is finding support at its 50-day moving average line.

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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