The Dow Jones Industrial Average rallied more than 400 points early Wednesday, while tech stocks erased sharp losses after diving on Georgia election results at the stock market open. Apple stock briefly sold off more than 3%, while Tesla jumped to all-time highs on bullish analyst commentary.
Tesla (TSLA) jumped nearly 4% on a price-target hike to hit an all-time high.
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. JD.com and Nvidia were this week’s IBD Stock Of The Day picks.
Dow Jones Today: Georgia Election Results
On Wednesday, the Dow Jones Industrial Average was up 1.35%, while the S&P 500 gained 0.9%. The tech-heavy Nasdaq composite turned slightly higher after erasing sharp losses.
Georgia election results showed leads for Democrat Senate candidates Raphael Warnock and Jon Ossoff, according to the New York Times forecasts. Early Wednesday, the Associated Press declared Warnock the winner, while the NYT forecasts say Ossoff is “pretty likely” to win.
According to the Worldometer data tracker, the cumulative number of confirmed coronavirus cases in the U.S. topped 21.5 million on Wednesday. Total virus-related deaths rose past 365,000.
The cumulative total of worldwide Covid-19 cases confirmed since the start of the outbreak topped 86.9 million Wednesday, with more than 1.87 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.
Tuesday’s Big Picture offered some optimism, “The stock market rebounded from Monday’s sell-off, as major indexes passed their first test of the new year. The Nasdaq, buried for a 1.5% loss on Monday, made up much of it with a 0.9% gain Tuesday. The S&P 500 bounced 0.7% and the Dow Jones Industrial Average rose 0.6%.”
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.
Dow Jones Stocks To Watch: Visa Inches Up
Shares moved up 0.5% Wednesday morning.
Stocks In Or Near Buy Zones: JD, Nvidia, Pinterest, Target
Tuesday’s IBD Stock Of The Day, JD.com, broke out above a 92.87 buy point Tuesday with a 10.6% surge to 95.50. Shares slipped 4% Wednesday morning to fall below the new entry.
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. The graphics-chip maker is moving up the right side of a flat base with a 587.76 buy point. Shares slid 2% early Wednesday.
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 remains just above its 10-week line despite Wednesday’s brief sharp losses.
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 trying to break out above a 234.65 buy point in a flat base, according to IBD MarketSmith chart analysis. Shares briefly broke out above the new buy point Tuesday, but closed below the buy point. Shares reclaimed the entry, rising 3% Wednesday morning.
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.”
IBD Leaderboard stock Tesla notched more all-time highs Wednesday morning with a nearly 4% gain. Shares are on pace to extend a win streak to nine sessions. Late Tuesday, Morgan Stanley upped its price target to 810.
Early Wednesday, Tesla stock hit a record high at 763.24. Shares have climbed as much as 63% from a 466 buy point in a cup with handle.
Dow Jones Leaders: Apple, Microsoft
Among the top Dow Jones stocks, Apple 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 that day, according to IBD MarketSmith chart analysis.
Shares lost 1.5% Wednesday 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 it 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 down 1.3% Tuesday, as shares continue to trace a new base with a 228.22 buy point. The stock is trying to hold above 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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