Stocks were off to a quiet start Tuesday, winking in and out of losses as markets awaited congressional testimony from Federal Reserve Chairman Jerome Powell. Bitcoin prices collapsed to their lowest level since last year. Pool, Alphabet, PayPal Holding and IHS Market all opened in buy ranges. And on the Dow Jones today, Microsoft climbed past a buy point.
XThe Nasdaq Composite slipped out of narrow gains to trade down 0.1%. The Dow Jones Industrial Average dipped 0.3%, while the S&P 500 fell 0.1% lower on the stock market today. Small caps showed early weakness, with the Russell 200 opening to a 0.5% decline.
Vaccine maker and IBD 50 stock Moderna (MRNA) continued its rally, up 3.2% to lead the Nasdaq 100. The company announced an expansion of production facilities enabling a 50% increase in its supply of Covid-19 vaccine.
At the top of the S&P 500, Etsy (ETSY) surged 1.8%, taking another run at resistance at its 10-week moving average. Ball Corp. (BLL) climbed 1.7% on an analyst upgrade.
CrowdStrike Holdings (CRWD) led the IBD 50 list, swinging 4.6% higher following an upgrade to buy, from hold, from Stifel. The note placed a price target at 300, more than 21% above Monday's closing price. The advance placed the stock just below a 251.38 buy point in a 19-week consolidation.
Data analyst software developer Splunk (SPLK) bolted ahead more than 10%. Private tech investors Silver Lake agreed to buy $1 billion in convertible senior notes with an initial conversion price of 160, 28% above the stock's closing price on Monday.
Among small caps, Sanderson Farms (SAFM) surged almost 11% on reports that it's exploring a sale. JPMorgan hoisted the stock's price target to 198, from 175. Sally Beauty (SBH) rallied more than 7%, after an upgrade from Oppenheimer.
After a quiet premarket session, meme stocks kicked into action. Clover Health Investments (CLOV) jetted 17% higher. Plug Power (PLUG) jumped 3% after reporting fiscal first-quarter results. GameStop (GME) vaulted more than 6% in early trade, after completing a $1.126 billion equity offering.
Dow Jones Today: Microsoft, Apple Buy Points
Microsoft (MSFT) gained 0.5%, setting the early pace on the Dow Jones today. The company plans to announce updates to its Windows operating system on Thursday.
Tuesday's gain lifted Microsoft stock past a 263.29 buy point from a shallow cup base. The IBD Leaderboard listing has been stacking bases on top of each other since January. And the bases all have enjoyed support above their 50-day/10-week moving average, making for a bullish chart.
Also on the Dow, Apple (AAPL) dipped 0.3% gain. Apple stock has spent the past six sessions back above support at its 50-day moving average. It is climbing the right side of a flat base, trading less than 4% below a buy point at 137.17.
Powell Testimony, Housing Data
The National Association of Realtors at 10 a.m. ET releases existing homes sales data for May.
At 2 p.m. ET, Fed chief Powell goes before the House Select Subcommittee on the Coronavirus Crisis.
In a statement prepared for that testimony, Powell said, "Since we last met, the economy has shown sustained improvement." He noted that indicators of economic activity and employment have continued to strengthen, and GDP appears on track to post its fastest rate of increase in decades.
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"Much of this rapid growth reflects the continued bounce back in activity from depressed levels," Powell said. He also noted that "The pandemic continues to pose risks to the economic outlook."
Vital Signs: Bitcoin, Bond Yields, Oil Prices
Bitcoin toppled more than 11%, cutting below $29,000 for the first time since last year, according to CoinDesk. Reports out of China on Sunday said as much as 90% of the country's bitcoin mining sector had been taken offline, after orders from China's government for electrical power providers to "screen, clean up and terminate" mining operations.
Bitcoin touched a record high above $64,800 on April 14. It is down almost 20% since the start of June, and has entirely erased its year-to-date gain.
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The 10-year yield crept higher Tuesday, trading at 1.50%, after settling at 1.48% on Monday. Treasury yields are caught in their first four-week decline since July 2020, after facing firm resistance at their 50-day moving average.
Oil prices dipped, with West Texas Intermediate down 0.6% but still holding just above $73 a barrel after jumping almost 3% on Monday. That is up above 19% from a May low, with a year-to-date gain nearing 51%.
Stocks To Watch: Pool, Entergy, IHS Markit
IBD's weekly Investing Action Plan singles out four stocks to watch this week. Entergy (ENTG) is in a cup base with a 126.51 buy point but could form a handle later. Pool (POOL) is in a buy range above a 449.54 buy point.
Alphabet (GOOGL) entered a buy range above a 2,431.48 flat-base buy point. PayPal (PYPL) also climbed back into a buy range, topping a 277.96 early entry. It remains below its official buy point of 309.24.
On the SwingTrader list, IHS Markit (INFO) advanced into a buy range Monday, over a 109.75 entry in a five-week, flat base-on-base pattern. Asset manager KKR & Co. (KKR) remains just below a 59.25 buy point in a six-week flat base.
The Fed, And An Uptrend Under Pressure
Powell's testimony this morning could shed some more light on a Federal Reserve struggling to come to terms with the shift in its long-term policy and strategy. Powell has focused the Fed on employment as its first priority, rather than on inflation. Not all members of the Fed are entirely on board with that change and, among those that are, not all are entirely confident in the approach.
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The result has been a vacillating message. Given that mixed messaging from the country's central bank, markets have responded appropriately. Friday's deep selling and Monday's powerful rally were driven by comments made by Federal Reserve Bank presidents.
In that shifty environment, IBD on Friday returned the stock market's status to "Uptrend Under Pressure." This signals the door remains open to new stock purchases, but should be undertaken more cautiously.
Nasdaq, S&P 500 And Dow Jones Today
The S&P 500 retook both its 50-day and short-term 21-day moving average in a powerful move on Monday. That was in character with its five earlier tests of support this year. If it holds that support, it sends a solid positive signal for the market's uptrend.
A strong-volume punch from the Nasdaq added some margin above the 14,000 level. The third such affirming punch since mid-June, it left the composite 2.6% above its 50-day line and just a fraction off Thursday's record high.
Most important, it is beginning to look as though 14,000 may become a floor, rather than a ceiling, for the index's action. That would be a significant and bullish change. But it is not a done deal yet.
For more detailed analysis of the current stock market and its status, study the Big Picture.
The Dow Jones today has to make up its mind on which way to go, after snapping its five-day selloff on Monday. The index is less than 1% below its 50-day moving average — an easy jump if the market is in rally mode. However, a loss today could widen that gap and signal longer-term challenges.
Small caps are also worth watching. Monday's Big Picture noted that the Russell 2000 small cap gauge rallied back above its 50-day line, ending the session up 15.8% since the start of the year.
The rebound by the S&P Smallcap 600 left that index just even with its 50-day line. Further improvement in those two gauges would send a bullish signal. Deterioration would help to weigh down the broader market.
Find Alan R. Elliott on Twitter @IBD_Aelliott
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