The Dow Jones Industrial Average rallied more than 1.7% in late-afternoon trade, with at least 11 of its 30 components up 2 points or more. But reports of California plans to re-shut parts of the economy triggered heavy selling in the final 45 minutes of trading. The blue-chip index edged fractionally higher, yet still showed solid outperformance vs. the tech-heavy Nasdaq in the stock market today
California's Governor Gavin Newsom ordered a shutdown of indoor dining as well as bars and tasting rooms throughout the Golden State. According to la.eater.com, eateries in the heavily populated counties of Southern California may continue to offer outdoor dining.
Meanwhile, Moderna (MRNA), which is racing to win the Covid-19 vaccine competition, surged as much as 24% in heavy volume before giving back some of that huge advance.
The Nasdaq suffered some heavy profit-taking among its highflying software components. At around 3 p.m. ET it held on to a thin gain of nearly 0.5%. Yet by day's end, heavy selling in enterprise software, internet, e-commerce and social media giants sent the Nasdaq down 2.1%.
At 10,390, the Nasdaq sank 4% below Monday's new all-time high of 10,824.
The Russell 2000 lost 1.3%, the S&P 500 0.9%. Volume ran higher vs. the same time Friday on both main exchanges, according to early data. The session likely confirmed a distribution day, or bout of intense professional selling.
Volatility surged, at least among options players.
The Cboe Volatility Index, or the VIX, stormed 17% higher to 32.05, marking the highest close since June 25.
Please see this Investor's Corner on why the VIX can help you spot short- and long-term market bottoms after a major sell-off.
Now A Large Cap Among Coronavirus Plays
Moderna stock was highlighted in this past Stock Market Today column published July 1 during a key test of the 50-day moving average.
Please also see this Investor's Corner on why the biotech, which specializes in messenger RNA technology, has now produced a follow-on buy point with a strong rebound off the 10-week line.
At the end of Monday's trading, Moderna's 10-week moving average rose to 50.92 vs. 48.63 last week.
According to IBD Stock Checkup, the Cambridge, Mass., firm ranks very low for Composite Rating (73 on a scale of 1 to 99) within the gigantic biotech industry group. That's natural, given the company is developing experimental medicines and has no earnings yet. But the 99 Relative Strength Rating justifies its importance.
The Street expects Moderna to post a net loss of 37 cents a share in the second quarter despite revenue growing 62% to $21.2 million. The company is slated to receive major government funding as the U.S. continues to reel from record daily increases in new Covid-19 infections. FactSet currently shows an estimate of $1.07 billion in revenue and earnings of 33 cents a share in the first quarter of 2021.
According to the CSSE at Johns Hopkins University, the United States has now eclipsed 3.35 million known cases and 135,000 deaths caused by the new virus.
Is Biotech Heating Up Again?
Meanwhile, SwingTrader recently noted a new buy point for a short-term trade in ProShares Ultra Nasdaq Biotech (BIB), an exchange traded fund. But BIB shares reversed sharply lower, sinking nearly 3%.
The ETF is now testing critical buying support at the 21-day exponential moving average.
PerkinElmer (PKI), a giant in the medical testing gear space, is trying to break out. Shares rallied 4% and briefly passed a 105.80 buy point in a flat base. Notice how that flat base formed on top of a cup with handle. Among true leading growth stocks, the base on base frequently forms and poses as bullish stock action.
PKI shares finished the day up 3% and volume nearly doubled its 50-day moving average of 896,000 shares per day.
Notice on a daily chart how the stock's relative strength line is ramping higher, a sign of outperformance vs. the S&P 500.
While the Dow Jones industrials have lagged all year, the blue-chip gauge showed positive action with a nice rise back above its slow-moving, long-term 200-day moving average. At the session high of 26,639, the 30-stock Dow Jones had gained as much as 3.6% since Thursday's sharp drop.
Headed into the final hour of the regular session, within IBD's 197 industry groups, superregional banks, farm equipment, gaming, mining and construction gear, specialty alloy, and chemicals paced the upside. All of these industries rose more than 2% on a price-weighted basis.
Please see the final price-weighted daily performance of all 197 industries at IBD Data Tables, updated roughly three hours after the market close.
Beyond Dow Jones: On The Upside And Downside
Long-dated U.S. Treasury bonds initially fell in price, sending yields a touch higher.
The benchmark 10-year bond's yield edged up to 0.66%. It began 2020 at 1.88%.
Earlier in the day, IBD's Stocks On The Move table showed Taiwan Semiconductor (TSM), electric truck startup Workhorse (WKHS) and semiconductor equipment group member Ichor (ICHR) showing solid gains in turnover running well above their 50-day moving averages, respectively.
IBD Live has discussed action in Taiwan Semiconductor over the past three to four weeks, just as it cleared a 58.14 correct buy point in a long cup with handle. Shares have now gotten extended, rising 15% past that entry point.
The 5% buy zone ran up to 61.05.
Elsewhere, Advanced Micro Devices (AMD) let a decent early gain slide into a 4.1% loss. Volume picked up 4% above the stock's 50-day moving average. #BullishSentiment##US##StockSurge#
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