Dow Drops 250 Points As Stock Market Erases Early Gains


Investor's Business Daily 11 October, 2021 - 03:31pm 7 views

Stocks extended their losses into the close Monday, as the Dow Jones Industrial Average reversed from an intraday gain to a 250 point loss.

The Dow Jones industrials fell 0.7%, the S&P 500 lost nearly 0.7% and the Nasdaq composite gave up 0.6% in the stock market today. Small caps tracked by the Russell 2000 also fell 0.6%. Volume was mixed, higher on the NYSE and lower on the Nasdaq vs. the same time Friday, early data showed.

Among exchange traded funds, Innovator IBD 50 (FFTY) dropped 0.8%, while the Nasdaq 100-tracking Invesco QQQ Trust (QQQ) also gave up 0.8%. The IBD 50 ETF, which recently tested its 200-day moving average, is still trading below the 50-day line.

The U.S. economy continues to recover from the Covid-19 pandemic, which triggered nationwide lockdowns over a year ago. A resurgence in cases fueled by the more contagious delta variant has recently started to slow down as vaccinations rise.

Cumulative Covid-19 cases worldwide are approaching 239 million, with nearly 4.9 million deaths, according to Worldometer. In the U.S., cases have topped 45 million with more than 733,000 deaths.

MarketSmith Growth 250 stocks scoring breakouts Monday included Asbury Automotive (ABG) and PNC Financial Services (PNC).

Asbury climbed past a 211.56 buy point of a cup with handle before paring gains, according to IBD MarketSmith chart analysis. Volume ran about 3% lower than normal. The stock closed slightly below the entry. If it breaks out again, the buy zone would top out at 222.14.

PNC Financial briefly crossed above a 203.98 flat-base entry, before reversing to a loss of 0.8% and closing below the buy point. Volume was about 25% lighter than usual.

U.S. crude oil futures surged more than 3% early Monday to a seven-year high, fueled by tight global supplies, before trimming some gains. Oil prices were up 2% to $81.05 in afternoon trade.

Over in the IBD 50, Cloudflare (NET) rallied 3% in above-average volume to a new high. Shares extended their win streak to an eighth session. The relative strength line, which compares a stock's performance to the S&P 500, is at a new high. That's a bullish sign.

Digital Turbine (APPS), Upwork (UPWK) and Atkore (ATKR) added 1.5% to 1.8% each.

But ACM Research (ACMR) sank 8%, while TaskUs (TASK) and Affirm (AFRM) shed more than 4% apiece.

TaskUs is testing its 50-day moving average for the first time in its trading history. The stock got airplay in Monday's IBD Live show.

CarGurus (CARG) fell 2.5% but in lower-than-usual volume. It's holding above a 33.45 buy point of a cup with handle cleared on Thursday.

Verizon (VZ) and Visa (V), down more than 2% apiece, were among the biggest Dow losers. Verizon extended its slide for a third straight session and is now trading at its lowest levels since April 2020. It also undercut the bottom of a flat base to exceed the 15% max correction for a flat-base pattern.

Visa stock is still working on a flat base with a 252.77 buy point. It's about 10% away from the entry as it continues to run into upside resistance at the 50-day moving average. Most of the base thus far has taken shape below the support line, a sign of weakness.

But Home Depot (HD), up 0.8%, led the upside on the blue chip index. Shares briefly climbed back up above a 338.65 buy point of a flat base first cleared last month, before easing. The buy range for Home Depot stock goes up to 355.58.

Keep in mind the market is still in correction, which makes all purchases highly risky. At this time, it's best to avoid taking new positions, except for small stakes in truly exceptional stocks.

Among other gainers, (CRM), Boeing (BA) and Walgreens (WBA) managed to hold onto small gains.

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6:50 AM ET Yandex sees its Relative Strength Rating enter the 80-plus level.

6:50 AM ET Yandex sees its Relative Strength Rating enter the 80-plus level.

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