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Stocks rallied in the starting bell on Monday as the market moved to extend Friday’s bullish rally. Bitcoin-related stocks soared as the cryptocurrency climbed back above $ 50,000. Chipmakers moved ahead after China approved ADI’s purchase of Maxim. BioNTech drove vaccine makers on the rise as the FDA granted full approvals. And Boeing and Chevron set the pace for the Dow Jones today, as they rebounded from heavy losses last week.
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Dow Industrials quickly rose 250 points at the opening, up 0.7% and confirming their technical support test on Friday. The S&P 500 jumped 0.8% as its rebound enters a third day. The Nasdaq Composite posted a gain of 1%, beating its 21-day moving average, as chipmakers invaded the top of the Nasdaq 100. 1.5% ahead.
Maxim integrated products (MXIM) climbed 5.8%, leading both the Nasdaq 100 and the S&P 500. Chip stocks took off as China’s State Administration for Market Regulation provided antitrust clearance for Analog devicesMaxim’s (ADI) purchase for $ 21 billion. The deal sparked optimism for other pending deals, including the proposed $ 35 billion purchase of Xilinx (XLNX) by Advanced micro-systems (AMD), and Nvidia(NVDA) awaiting $ 40 billion deal for SoftBank‘s (SFTBY) ARM unit.
Xilinx rose 4.4%. AMD gained 2.4%. ADI climbed 2.8%. ETF VanEck Vectors Semiconductor (SMH) gained 1.8% at the start of trading.
A handful of China-based stocks were also strong on the Nasdaq 100, while oil stocks supported the S&P 500, led by Western Oil (OXY), WHAT (APA) and Marathon Oil (MRO). Vaccine manufacturers have operated in force, with BioNTech (BNTX) up more than 10% after the Food and Drug Administration granted full approval to some vaccines.
IBD Ranking Stock Nvidia (NVDA) jumped 3%, seeking to add a third straight lead. The payoff sent the graphics chip leader past what Leaderboard identifies as a 208.85 entry in a flat base. IBD MarketSmith analysis places the stock in a buy range above a buy point of 207.43 in a cup base with handle. This buying range extends to 217.80.
Medical software developer Proximity (DOCS) leads the IBD rankings with a 5.9% lead. Immode (INMD) traded up 2.9% and is looking to add a fifth straight daily lead. Holdings reached (UPST) was an early leader in the IBD 50, up 2.5%. A pullback last week left the cloud-based consumer loan platform around 2% below 191.99 buy point in a nine-week deep cut base.
Dow Jones Today: Chevron tops, J&J down as FDA approves vaccines
Chevron (CLC) and Boeing (BA) were the big winners in the Dow today as oil rose and the dollar fell from the more than nine-month high it hit on Friday. Chevron jumped 1.8%, driving oil prices higher. Boeing also jumped 1.8%.
Johnson & johnson (JNJ) hooked to Dow Jones low, down 0.3%, as vaccine competitors Pfizer (PFE), Modern and BioNTech (BNTX) rallied. The United States Food and Drug Administration reportedly granted full approval to the Pfizer / BioNTech and Moderna vaccines early Monday. Pfizer rose 3.1%. BioNTech jumped 10.4%. Moderna – an IBD 50 stock – jumped 4.2%.
Bitcoin rallies above $ 50,000
Bitcoin continued the rally that began on July 20, rising about 2% early Monday and surpassing $ 50,000 for the first time since mid-May. The cryptocurrency has traded as high as $ 50,495 and as low as $ 48,128 in the past 24 hours, according to Coindesk. Bitcoin peaked above $ 64,829 in mid-April.
Among the bitcoin-sensitive stocks, Marathon Digital Holdings (MARA) grew 6.6%. MicroStrategy (MSTR) jumped 4.1%. Riot blockchain (RIOT) scrambled 6.7%. PayPal funds (PYPL) gained 1.1%. Grayscale Bitcoin Trust (GBTC) was inactive at the start of trading.
Vital signs: oil dives, ease of bond yields, bitcoin stability
Crude oil prices rebounded strongly on Monday morning as the falling dollar attracted buyers. West Texas Intermediate traded nearly 4% more to exceed $ 64 a barrel. WTI plunged 8.9% last week, its biggest drop since April 2020. WTI prices stabilized on Friday down nearly 16% so far for August, the steepest drop since March 2020, and are heading for their first monthly drop in five months.
ETF stock market strategy and how to invest in the current uptrend
The 10-year Treasury yield abandoned its early gains and flattened, after stabilizing at 1.26% on Friday. Yields are down more than 14% since early August and are heading for a third consecutive monthly decline. Falling yields indicate buying activity in bonds, which are a safe haven and tend to reflect the outflow of capital from stocks. The 10-year rate hit its highest of the year, just above 1.76%, in early March.
5 stocks to watch: Chipotle, Deckers, ASML, Align
This week opens with a handful of top growth stocks forming tight three-week foundations. Mexican Grill Chipotle (CMG), ASML Holding (ASML), Zscaler (HP), Align technology (ALGN) and Outdoor Deckers (PLATFORM).
A five-week lead after a breakout in July placed Chipotle about 1% below an entry of 1,912.85 in what started out as a tight three-week pattern, but has now expanded to five weeks. .
ASML Holding, which is on both the IBD 50 and Leaderboard lists, put the finishing touches on its tight three-week model on Friday. That left it about 2% below a buy point of 805.74.
Align Technology recorded a three-week drop through Friday. But the drops have been slight. So, the week before, Align had completed a tight three-week model. He extended that to a tight four weeks last week, with an entry at 714.25.
Zscaler’s tight three-week entry is at 250.10. This one deserves a little more caution, as the pattern formed following a fourth step base. Tight three week models lose potency in late stage situations, so be aware that breaking this pattern would carry a bit more risk.
Uggs maker Deckers is on hold in a tight three-week pattern with a buy point at 444.58, around 2% above the end of the action on Friday. Deckers is sitting on a gain of almost 52% year-to-date.
Nasdaq, S&P 500, Dow Jones today
The Nasdaq and S&P 500 have rebounded for two days, with the Nasdaq Composite firmly recovering from a fall below the 50-day support to finish Friday flush with its 21-day exponential moving average. It also puts the Nasdaq just over 1% below its August 5 high and less than 2% of the index’s first rise above the 15,000 mark. The Nasdaq is now in positive ground for the month, up 0.3% through Friday.
The S&P 500 pullback stopped before its 50-day line, then quickly reversed above its 21-day level. The index finished 0.9% on Friday from its August 16 high and up 1.1% since early August, now heading for its seventh consecutive monthly advance.
Stay on top of the market, read the IBD overview every day
After a good rebound on its 50-day line on Friday, the Dow Jones will today try to regain support for its 21-day line. The Dow Jones had advanced 0.5% in August, now has a firm grip above the 35,000 level and closed Friday within 2% of its August 16 high.
The iShares Russell 1000 Growth ETF (IWF) also ended last week with a strong rebound. A two-day rebound left the fund firmly above support at its 21-day line, and just a fraction of its late-July high. The move leaves the fund in a buy range on a rebound from its 10-week moving average. It also places the ETF just below a buy point of 284.57 in a tight four-week chart pattern.
Small caps will be key to watch today, after the Russell 2000 and S&P Smallcap 600 recorded six-day declines on Friday. For the Russell, the rebound took the index back above support at the 200-day moving average. The S&P 600 turnaround halted its decline long before a test of support.
Chinese markets rebound, Europe progresses
The Hong Kong and Shanghai markets rebounded after a difficult week, following the rollout of stricter regulations, including sweeping new data privacy rules on Friday. The Shanghai Composite jumped 1.5% on Monday. Hong Kong’s Hang Seng Index resumed a gain of 1.1%. The rebound spread to Japan, where Tokyo’s Nikkei 225 rose 1.8%, despite a plummeting dollar.
5 best Chinese stocks to buy and watch as Beijing crackdown continues
Among Chinese gauges in the United States on Monday morning, the iShares MSCI China ETF (MCHI) was inactive at the start of the action. The Xtrackers Harvest CSI 300 China A-Shares ETF (ASHR) was also unchanged. KraneShares CSI China Internet ETF technology tracker (KWEB) climbed 0.7%.
European markets posted uneven gains in afternoon trading. The FTSE 100 in London added 0.3%. The CAC-40 in Paris climbed 0.85%, while the DAX in Frankfurt defended a lead of 0.2%. The ETF SPDR Portfolio Europe (SPEU) rose 0.5% in early trade, after slipping 2.2% last week. The ETF regained support at its exponential 21-day moving average on Friday, trading just below a buy point of 44.06 on a nine-week flat base.
Find Alan R. Elliott on Twitter @IBD_Aelliott
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