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The rally in equities gathered strength on Tuesday, as earnings news provided a rise against mixed global action, and as oil prices and bond yields continued to decline. HCA Healthcare, Halliburton and Crown Holdings rebounded from earnings. IBM rose to the top of the Dow Jones today thanks to its second quarter earnings. And Netflix, Intuitive Surgical, and Chipotle Mexican Grill were all close to buying areas before the expected post-close results were released.
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The Dow Jones opened 0.3% higher, taking up a small portion of Monday’s 2.1% decline. The Nasdaq Composite gained nearly 0.2%. The S&P 500 added 0.0.2%, suggesting possible support to its 50-day moving average.
Manufacturer of fitness equipment platoon (PTON) jumped 5.6% to dominate the Nasdaq 100. The company said it would work with UnitedHealth Group (UNH) to provide UNH members with free access to Peloton classes. Peloton is up nearly 12% this week as it bounces off its 10-week moving average.
IBD 50 shares Modern (MRNA) topped the Nasdaq, up more than 4% as it prepares for its entry into the S&P 500 Index at the start of trading on Wednesday. Moderna rose 9.5% on Monday and gained more than 39% in July.
Hospital operator HCA Health (HCA) climbed more than 11%, leading the S&P 500, after reporting a big profit win in the second quarter. HCA stock closed Monday low in a buy range above a base buy point at 217.46.
Drug distributors Cardinal Health (CAH) and Amerisource Bergen (ABC) increased by more than 4%. poet McKesson (MCK) jumped 5%. The Wall Street Journal reported that a billion dollar settlement was likely in a New York State case over the role of the pharmaceutical industry in the opioid epidemic. A larger settlement of $ 26 billion is expected this week.
Can manufacturer Crown assets (CCK) rose nearly 3% after reporting a solid profit exceedance and weaker than expected revenue growth on Monday night. Regional bank holding Capital of Silvergate (SI) jumped more than 5% higher. Swiss bank UBS (UBS) climbed 2.5% after a strong second quarter report. Heavy truck in the oil service Halliburton (HAL) jumped 1% after its earnings report.
Dow Jones today: IBM, Visa, Microsoft
Actions of IBM (IBM) climbed 3.4%, taking an easy lead over the Dow Jones today. The Armonk, NY-based company reported second quarter earnings and revenue well above analysts’ targets on Monday evening, in the company’s best quarter in more than three years.
The company’s cloud computing business grew 13% in the quarter, to $ 7 billion. The company is in the process of divesting its $ 19 billion managed infrastructure business.
Visa (V) added 0.2%, while Microsoft (MSFT) plunged to fractional losses. Visa fell back into a buy range above a buy point of 237.60. The buy range extends to 249.48.
Microsoft is being extended after wiping out a cup base in June. The stock is heading towards its first weekly decline in nine weeks and is considering a possible test of support at its 50-day / 10-week moving average. Microsoft is an IBD ranking list.
Mixed June construction data
June housing starts jumped at an annualized rate of 1.64 million, the Commerce Department reported, from 1.572 million in May. The number, also higher than expected for a rate of 1.59 million, was the highest in three months.
Building permits, which gauge future activity, slipped to 1.598 million. That was down from May’s tally of 1.681 million, and below expectations for a pace of 1.7 million.
Gains: Intuitive Surgical, Chipotle, Netflix Stock
Netflix (NFLX) is the post-close profit report, with Intuitive surgery (ISRG), United Airlines (UAL) and Mexican Grill Chipotle (CMG).
Netflix’s current chart model is a second stage double bottom base with a buy point of 563.66. Stocks finished just under 6% below that entry on Monday. Netflix stock was down 0.9% in pre-market trading on Tuesday.
Intuitive Surgical is pulled ahead of its report, in a test of support to its 10-week moving average. A rebound on this line would create a buying opportunity. The five-day pullback also put the stocks in the upper part of a buy range above a 5% buy zone after a breakout in late June.
Chipotle Mexican Grill is also testing support ahead of earnings, but at its 21-day exponential moving average. The stock also returned below a buy point of 1,579.62 in what IBD MarketSmith analysis presents as an 11 week cut base.
Delta virus, global markets
The Delta strain of the coronavirus continued to shred unvaccinated portions of the population, reversing what had been a steady decrease in hospitalizations and triggering lockdowns to varying degrees in cities, states and countries around the world. Vaccinations have helped soften the impact of infections, but the average number of new cases in the United States has nonetheless doubled in the past two weeks.
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Hong Kong and Tokyo markets fell further on Tuesday, with Hong Kong’s Hang Seng index down 0.8% and Tokyo’s Nikkei 225 down 1%.
European markets were trying to rebound from Monday’s losses. In the afternoon trading, the CAC-40 in Paris posted a gain of 0.5%. London’s FTSE 100 rose 0.2%, while the Frankfurt DAX was flat.
Vital signs: bond yields, oil prices, Bitcoin
Bonds gained, sending yields even lower after plunging to five-month lows on Monday. The 10-year yield fell to 1.15% early Tuesday, from 1.18% on Monday. Yields have fallen in eight of the past nine weeks and stabbed support at their 200-day moving average on Monday. The last time the 10-year yield fell below the 200-day support line was in December 2018. It started a nine-month drop that ended just before the Covid-19 pandemic .
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Oil prices reversed their initial gains and continued their fall, after plunging 7.5% on Monday – the worst single-day drop since September. Prices began to drop after the Organization of the Petroleum Exporting Countries and its Russia-led partners, commonly referred to as OPEC +, agreed on a strategy on Sunday to bring production back to pre-pandemic levels. by 2022.
West Texas Intermediate fell 1.8% on Tuesday to just over $ 65 a barrel. Oil prices are now heading for a third straight decline, on the heels of a six-week rally. Prices on July 6 hit $ 76.98, their highest level since October 2014.
Bitcoin slipped back below $ 30,000 on Monday, trading over 3% to below $ 29,600 by early Tuesday. The cryptocurrency had traded above $ 36,000 in late June and hit a record high of nearly $ 65,000 in April.
Stocks to watch: Sea Limited, Tesla
On the IBD 50 list, Limited sea (SE) gained 0.8% on Tuesday morning. The Singapore-based internet platform reversed on Monday to achieve a 2% gain after falling to test its 50-day moving average. Stocks finished flat with their 21-day moving average and less than 2% below a buy point of 278.10.
IBD Ranking Stock You’re here (TSLA) gained 0.9% on Tuesday morning. The stock had climbed from Monday’s lows to end the session with a gain of 0.3%. That ended a four-day retreat and left the stock tangled in its converging 21, 50, and 200-day moving averages. Tesla shares are down 8.4% year-to-date and 28% below their January high.
Stock market today: watch lists
The deterioration in market action, including the change in market status on Friday, is warning investors to be on the defensive. Protecting capital – by locking in even the smallest gains and limiting exposure – becomes a key priority. Usually, this is the time to create watchlists, in order to prepare for a surge in the market.
For a more detailed analysis of the current stock market and its state, study the big picture.
As the earnings season accelerates, investors may be tempted to grab major stocks ready to pass buy points on earnings news. Those who do must be careful. Pyramid into positions, and study their options strategy for the earnings season, to limit risk.
Nasdaq, S&P 500, Dow Jones today
A difficult day in the market on Monday followed the change in market status on Friday to “uptrend under pressure”.
The S&P 500 is testing support at its 50-day moving average. The Nasdaq fell below its 21-day line, but held comfortably above the 50-day level. The Dows Jones Industrial Average broke below support at its 50-day average, similar to its breakout in mid-June.
The early action showed that the Dow Jones today and other benchmarks have risen early.
For a more detailed analysis of the current stock market and its state, study the big picture.
Small caps will remain a point of interest, after a five-day drop leaving the Russell 2000 facing a test of support at its 200-day line. The index entered intermediate correction status on Monday, briefly dipping more than 10% below its June 9 high. The index has not touched its 200-day line since a brief test of support in September.
Find Alan R. Elliott on Twitter @IBD_Aelliott
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