Shares fell at the start bubble and changed rapidly on Wednesday as the market felt direction after Tuesday’s drop. Netflix plunged into early trading after disappointing subscriber growth. A handful of stocks from the medical sector showed strength, with profits from Edwards Lifesciences and Intuitive Surgical soaring. Nike led the Dow Jones today and recovered from a fall on Tuesday.
X
The Dow Jones Industrial Average opened lower then fought to squeeze gains Nike (NO) and climbed Johnson & Johnson (JNJ) withdrew after Tuesday’s rally. The S&P 500 also recovered to trade flat. The Nasdaq Composite fell 0.3% in the stock market today, hurt by Netflix‘s (NFLX) decline.
Netflix fell hardest among the Nasdaq and S&P 500 stocks. Oil field service heavyweight Halliburton (HAL) swooned more than 4%, homebuilder NVR (NVR) fell 3.4% after first quarter earnings reports.
Among manufacturers of medical products, Edwards Lifesciences (EW) jumped 4.7% after scoring solid sales and earnings beats in the first quarter and raising expectations for the second quarter above analyst estimates. The shares ended in a buy range above a basic double bottom buyout at 88.30 on Tuesday, leaving the buy range in early trading.
Innovator in the field of medical robotics Intuitive Surgical Procedure (ISRG) also rose on earnings news, up 6.7% from a double bottom base breakout. The stock rose outside the buy range of 812.89 buy point.
IBD 50 stock ASML Holdings (ASML) rose more than 3% higher after a strong performance in the first quarter.
Elsewhere, based in Switzerland TE Connectivity (TEL) jumped more than 2% on profit, rising to a buy point of 136.11. Citrix systems (CTXS) was down 4.4%, with a high buy point of 144.08.
Dow Jones Today: UnitedHealth, Verizon
Nike took an early lead over the Dow Jones today, up 1.1%. A 4.1% plunge on Tuesday left the stock test support on its 200-day moving average.
UnitedHealth Group (UNH) rose 0.5% after an upgrade to buy off hold from Argus Research. The report cited strong membership growth in the company’s managed care business and a healthy backlog in the Optum business, as well as the company’s industry-leading return on investment. The report set the stock’s price target at 450, about 14% higher than where the stock closed Tuesday.
Verizon (VZ) fell 0.2% as investors delved into the first quarter results.
Johnson & Johnson shares fell 0.9% one day after a 2.3% rise on earnings, and on news that partner’s Covid-19 vaccine developed BioNTech (BNTX) was to be rolled out in Europe, but with a warning label attached. Doses of the vaccine were discontinued after a small proportion of recipients developed life-threatening blood clots. After investigation, the European Medicines Agency determined that the benefits of the vaccine far outweigh the risks, and that the coagulation should be considered a “very rare side effect of the vaccine”.
Also on Tuesday, the U.S. Food and Drug Administration halted operations at an Emergent BioSystems facility where the J&J vaccine was produced, after contamination of millions of doses of both the J&J and J&J vaccine. AstraZeneca (AZN) vaccines.
Small Caps Flat As Welbilt, Owens & Minor Rally
In small caps, the Vanguard Russell 2000 Index Fund ETFVTWO rose 0.7% early on.
At the top of the Russell 2000, food service equipment manufacturer Welbilt (WBT) was up 23% after industry heavyweights Middleby (MIDD) agreed to buy the New Port Richey, Florida-based outfit in a $ 2.93 billion deal. Middleby shares were down 2.6%.
Manufacturer of personal protective equipment Owens & Minor (OMI) rose 2.7%, positioning the stock as a possible buy after recovering from the 10-week moving average. Owens & Minor, the top-ranked stock in the Medical-Wholesale Drug / Supplies industry group, is one of five manufacturers to be awarded contracts for the supply of N95 masks and other Covid-related protective devices.
Netflix earnings
Netflix revenues outpaced views, but subscriber growth of 3.98 million fell far behind. The FANG stock sees only 1 million new streaming customers in the second quarter. Netflix is facing a post-pandemic environment amid increasing competition from Disney (DIS) and its Disney + streaming service. Management said it would launch a $ 5 billion share buyback program this quarter.
NFLX shares fell more than 8% early Wednesday. That meant a move below the 50-day and 200-day lines. A 0.9% dip on Tuesday left the stock at 549.57, less than 2% below a buy point of 559.85 from a small hold on a weekly chart.
Bitcoin Bobs, CoinBase Holds
Bitcoin prices were stable, at between $ 55,000 and $ 56,000 early Wednesday, according to CoinDesk. The cryptocurrency soared to a new high above $ 64,800 a week ago, before the Coinbase Global (COIN) IPO. Shares fell below USD 54,000 on Sunday, but Bitcoin continues to rise more than 90%, after starting the year just above USD 29,000.
Shares of cryptocurrency exchange Coinbase traded a fraction higher, after closing at 320.82 on Tuesday. The Coinbase IPO initially cost 250. CAN SLIM rules do not recommend jumping into IPOs too early amid all the initial speculation and excitement over the offering. Better to sit down and look at the chart of the new stock. Waiting for it to form and break out of an IPO base helps mitigate downside risk.
Nasdaq Vs. Dow Jones Today: Tighter Tolerances
A two-day retreat has left the Nasdaq Composite hovering just above its 21-day exponential moving average and ready for a test of support. The S&P 500 and Dow Jones Industrial Average are pulled back from record highs. Year to date, the Dow is up 10.5% and the S&P 500 is up 10.1%, while the Nasdaq is up 6.3%.
For the Nasdaq, a break in support on its 21-day line – which is also the level of the March highs – would indicate a possible drop back to the 50-day / 10-week moving average. The index is looking for some support to consolidate before it returns to 14,000.
For a more detailed analysis of the current stock market and its status, study the big picture.
Nasdaq tracker Invesco QQQ Trust ETF (QQQ) lost 0.7% on Tuesday, tumbled back below the buy point of 338.29, but held the support on the 21-day line. There was a marked deterioration in the small cap indicators as the Russell 2000 drove 2% lower and the S&P Smallcap 600 fell below both the 21-day and 50-day support lines.
The stock market remains in a confirmed upward trend, but the market is becoming more and more volatile. That uncertainty may resolve on its own or get worse as the March reporting season gathers momentum. For now, as noted in Ed Carson’s early Stock Market Today update, when they run out of stock, investors should rotate to cash. It is a good time to tighten stop-loss tolerances and take profits where possible, especially in stocks whose profits are due.
Market Vital Signs: Oil, Copper, Bond Yields
Commodities were mixed after charting some losses on Tuesday.
West Texas Intermediate oil fell 2.8% to less than $ 61 a barrel. WTI briefly climbed above $ 64 on Tuesday, its highest level since mid-March and up 10% from a late March low. Prices then reversed to come out at $ 62.44. Copper added 0.6% to trade more than $ 4.24 a pound. Prices hit a nearly 10-year high of $ 4.30 on Feb. 24. Copper and oil prices are key indicators of economic sentiment, driving movements in mining and energy stocks.
Stock Market ETF Strategy and How to Invest in Current Upward Trend
Bond yields continued to fluctuate, with the 10-year yield rising to 1.57%, after hitting 1.56% Tuesday, according to data from CBOE. Interest rates had its worst week since July last week, dropping to 1.53% on Friday. They bypassed pre-pandemic levels in late March and climbed to nearly 1.76% – the highest level since January 2020. Yields had started at about 1.8% in 2020, down from about 2.7% a year earlier. and then fell to record lows of around 0.5 in August. %.
Find Alan R. Elliott on Twitter @IBD_Aelliott
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