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The Dow Jones industrial average gained more than 300 points on Tuesday, as tech stocks surged as Treasury yields fell from Monday’s high. Apple and Tesla shares retreated with large gains in morning trading, while Bitcoin surged.
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Among the leaders of the Dow Jones, Apple (AAPL) jumped 4% on Tuesday, while Microsoft (MSFT) rose about 3% in the current stock market. Disney (DIS) advanced out of buy range on Monday, as Visa (V) remains in the buy range above a new point of purchase.
You’re here (TSLA) jumped 14% on Tuesday, seeking to recoup some of Monday’s 5.8% dive. After closing on Monday, Point correction (SFIX) published mixed tax results in Q2.
Among the best stocks to watch, Alphabet (GOOGL), Polaris (PII) and Westlake Chemical (WLK) are holding up well to the current market correction.
Microsoft, Polaris and Tesla are stocks in the IBD ranking. Alphabet was featured in this week’s Stocks Near A Buy Zone column. Westlake was the IBD title of the day on Monday.
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Early Tuesday, the Dow Jones Industrial Average rebounded 0.9%, while the S&P 500 was up 1.8%. The high-tech Nasdaq composite climbed 3.4%, on track to recover from Monday’s 2.4% sell-off.
The 10-year Treasury yield rose to 1.617% on Monday, according to MarketWatch, before closing at 1.596%. The 10-year yield eased to around 1.533% on Tuesday morning.
Among exchange-traded funds, the Innovator IBD 50 (FFTY) posted a 4% rise on Tuesday. The Nasdaq 100 Invesco QQQ Trust ETF (QQQ) tracker rose 3.5%. Meanwhile, the SPDR S&P 500 ETF (SPY) rose 1.5%.
Market correction
On March 4, major stock indexes were rocked by strong selling, while major growth stocks collapsed as well. The Nasdaq dipped to close at its lowest level since Jan. 4, turning negative for the year. The high-tech composite will end on Monday down 2.2% in 2021 after rebounding as much as 10% from January 1 to its high on February 16.
IBD’s market outlook was lowered to “correcting market” on March 4th. During these times of strong weakness in the stock markets, investors should be lightly invested – even 100% cash – until the next day. The follow-ups signal a new potential uptrend in the market and give the green light to start buying stocks again. Currently, this is the third day of a new rally attempt after Friday’s rebound.
Use the downtime as a chance to take a mental break; however, do not log out. Be on the lookout for the emergence of the next leaders. One of the best ways to identify the next cycle for major stocks during market corrections is to use the line of relative strength. The RS line measures the price performance of a stock relative to the S&P 500. If the stock outperforms the market as a whole, the RS line tilts upward. If a stock is performing worse than the broader market, the line will point lower.
Monday’s Big Picture commented: “Friday’s positive reversal offered hope for a stock market bottom. The Nasdaq hit back after a 2.6% loss to close a 1.5% rise today “There. But the bullish momentum did not last until Monday. In fact, a late fading market is a sign of underlying weakness.” Check out The IBD’s Big Picture for more stock market commentary.
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Bitcoin price
Bitcoin rallied around 5% on Tuesday, topping $ 54,000. The price of Bitcoin traded around $ 54,400 in morning action, according to CoinDesk.
The price of Bitcoin hit an all-time high on February 21, reaching $ 58,332.
The Grayscale Bitcoin Trust ETF (GBTC) looked to extend a three-session winning streak on Tuesday, as the Bitcoin-tracking ETF continues to recover from its 50-day support level. The GBTC rose 7.2% on Tuesday morning.
Dow Jones Stocks: Disney, Visa
Inside the Dow Jones Industrial Average, Disney stock slipped more than 1% on Tuesday morning. On Monday, shares jumped more than 6% after California reported that Disneyland and California Adventure could reopen on April 1. This moved the stock out of the buy zone on Monday past a buy point of 183.50 on a flat basis.
Visa stock climbed beyond a buy range above a buy point of 211.69 in a handle mug after a February 23 breakout, according to IBD chart analysis MarketSmith. The 5% buy area rises to 222.27.
Stocks gained 1.1% on Tuesday, moving just beyond the buy range.
Stocks to watch: Alphabet, Polaris, Westlake
Stock market leader FANG Alphabet is resisting the recent weakness in the stock market. Shares remain broad from a buy point of 1,843.93 in a flat base, and are around 2% of an entry of 2,145.24 in a tight three-week pattern.
Stocks appeared to rebound from Monday’s 4.3% drop, rising more than 2% in morning trading.
Polaris broke a 129.10 buy point on a flat basis on Friday with a 5.7% gain. The stocks are in the 5% buy zone which tops out at 135.56. Polaris stock rose 0.8% on Tuesday.
According to IBD Stock Checkup, Polaris stock shows a solid 90 on a perfect IBD composite rating of 99. The IBD composite rating helps investors easily measure the quality of a stock’s fundamental and technical metrics.
Monday’s IBD headline Westlake Chemical traded a buy point of 90.46 amid Tuesday’s 1% lead. Stocks finished in the 5% buy zone which tops out at 94.98. The title tacked on 0.1% Tuesday morning.
Westlake was added to the IBD rankings on Monday. According to the leaderboard commentary, “The last base of the action is the second step, and the line of relative strength makes new highs as the stocks break out. Both are positive elements for the chart.”
Stock market benefits: Stitch Fix
After the close on Monday, Stitch Fix reported a loss of 20 cents per share, beating estimates. But sales missed consensus targets. The company reported revenue of $ 504.1 million, lower than analysts’ estimates for revenue of $ 512.2 million.
Stitch Fix shares plunged more than 26% in Tuesday morning trading. The stock closed below its 50-day line on Monday, around 40% of its 52-week high.
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Tesla stock
Tesla stock appeared to break a five-day losing streak on Tuesday, with a more than 14% rise in morning trading. Stocks could form a new basis, but it is too early to identify a new entry.
On February 22, the EV leader broke down on its key 10-week moving average line, a critical support level.
On January 25, Tesla stock hit an all-time high at 900.40, after climbing 93% from a buy point of 466 in a handle mug. The shares are about 37% lower than ever.
Dow Jones Executives: Apple, Microsoft
Among the major stocks in the Dow Jones, Apple rebounded 4% on Tuesday after falling 4.2% on Monday. Apple stock remains below its 10 week line, but a strong rebound above the level would be bullish for the stock’s outlook.
On February 18, Apple stock triggered the 7% to 8% loss reduction sell rule when it fell more than 7% below its buy point of 138.89 in a cup with handle.
Meanwhile, Microsoft rose about 3% on Tuesday, seeking to recover from Monday’s 1.8% drop. The stock remains below its buy point of 232.96 and has fallen back below its 50-day line.
Be sure to follow Scott Lehtonen on Twitter at @IBD_SLehtonen to learn more about growth stocks and the Dow Jones Industrial Average.
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