Stock rallied into the starting bell Monday, as the market moved to extend Friday’s bullish rally. Bitcoin-related stocks bolted higher as the cryptocurrency climbed back above $50,000. Chipmakers advanced after China gave ADI’s purchase of Maxim a nod. BioNTech led vaccine makers rising as the FDA granted some full approvals. And Boeing and Chevron paced the Dow Jones today, as they rebounded from tough losses last week.
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The Dow industrials jetted a quick 250 points higher at the open, up 0.7% and affirming its test of technical support from Friday. The S&P 500 swung up 0.8%, as its rebound enters a third day. The Nasdaq Composite clocked in with a 1% gain, muscling above its 21-day moving average, as chipmakers crowded the top of the Nasdaq 100. In addition, small caps were off to a hot start, with the Russell 2000 knocking out an early 1.5% advance.
Maxim Integrated Products (MXIM) vaulted 5.8%, leading both the Nasdaq 100 and the S&P 500. Chip stocks kicked into motion as China’s State Administration for Market Regulation provided antitrust clearance for Analog Devices‘s (ADI) $21 billion purchase of Maxim. The deal spurred optimism for other deals in the works, including the proposed $35 billion purchase of Xilinx (XLNX) by Advanced Micro Devices (AMD), and Nvidia‘s (NVDA) pending $40 billion deal for SoftBank‘s (SFTBY) ARM unit.
Xilinx rocketed 4.4% higher. AMD gained 2.4%. ADI climbed 2.8%. The VanEck Vectors Semiconductor ETF (SMH) gained 1.8% in early trade.
A handful of China-based stocks also ran strong on the Nasdaq 100, while oil stocks bolstered the S&P 500, led by Occidental Petroleum (OXY), APA (APA) and Marathon Oil (MRO). Vaccine makers ran strong, with BioNTech (BNTX) up more than 10% after the Food And Drug administration granted full approval to some vaccines.
IBD Leaderboard stock Nvidia (NVDA) jumped 3%, looking to add a third-straight advance. The gain sent the graphics chip leader past what Leaderboard identifies as a 208.85 entry in a flat base. IBD MarketSmith analysis puts the stock in a buy range above a 207.43 buy point in a cup-with-handle base. That buy range extends to 217.80.
Medical software developer Doximity (DOCS) topped the IBD Leaderboard list with a 5.9% advance. Inmode (INMD) traded up 2.9% and looking to add a fifth-straight daily advance. Upstart Holdings (UPST) was an early IBD 50 leader, rising 2.5%. A pullback last week left the cloud-based consumer lending platform about 2% below 191.99 buy point in a deep nine-week cup base.
Dow Jones Today: Chevron Leads, J&J Down As FDA Approves Vaccines
Chevron (CVX) and Boeing (BA) were the big early winners on the Dow Jones today, as oil rose and the dollar eased off the high of more than nine months that it notched on Friday. Chevron jumped 1.8%, chasing oil prices higher. Boeing also popped 1.8%.
Johnson & Johnson (JNJ) hung at the bottom of the Dow, down 0.3%, as vaccine competitors Pfizer (PFE), Moderna and BioNTech (BNTX) rallied. The U.S. Food and Drug Administration reportedly granted full approval to the Pfizer/BioNTech and Moderna vaccines early Monday. Pfizer rallied 3.1%. BioNTech vaulted 10.4%. Moderna — an IBD 50 stock — jumped 4.2%.
Bitcoin Rallies Above $50,000
Bitcoin continued the rally begun on July 20, rising about 2% early Monday and crossing above $50,000 for the first time since mid-May. The cryptocurrency traded as high as $50,495 and as low as $48,128 over the past 24 hours, according to Coindesk. Bitcoin touched a high above $64,829 in mid-April.
Among bitcoin-sensitive stocks, Marathon Digital Holdings (MARA) rallied 6.6%. MicroStrategy (MSTR) surged 4.1%. Riot Blockchain (RIOT) scrambled 6.7%. PayPal Holdings (PYPL) gained 1.1%. Grayscale Bitcoin Trust (GBTC) was inactive in early trade.
Vital Signs: Oil Dives, Bond Yields Ease, Bitcoin Steady
Crude oil prices took a healthy bounce early Monday, as a slumping dollar drew in buyers. West Texas Intermediate traded almost 4% higher to above $64 a barrel. WTI dived 8.9% last week, its biggest drop since April 2020. WTI prices settled on Friday down nearly 16% so far for August, the steepest decline since March 2020, and tracking toward their first monthly decline in five months.
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The 10-year Treasury yield gave up early gains and flattened, after settling at 1.26% on Friday. Yields are down more than 14% since the start of August, and headed for a third-straight monthly decline. Falling yields indicate buying activity in bonds, which are a safe haven and tend to reflect capital moving out of stocks. The 10-year yield touched its high for the year, just above 1.76%, in early March.
5 Stocks To Watch: Chipotle, Deckers, ASML, Align
This week opens with a handful of top growth stocks forming three-weeks-tight bases. Chipotle Mexican Grill (CMG), ASML Holding (ASML), Zscaler (ZS), Align Technology (ALGN) and Deckers Outdoor (DECK).
A five-week advance following a July breakout has put Chipotle about 1% below an 1,912.85 entry in what began as a three-weeks-tight pattern, but has now extended to five weeks.
ASML Holding, which is listed on both the IBD 50 and Leaderboard lists, put the finishing touches on its three-weeks-tight pattern on Friday. That left it about 2% below an 805.74 buy point.
Align Technology notched a three-week decline through Friday. But the declines have been mild. So, in the prior week, Align had completed a three-weeks-tight pattern. It extended that to four-weeks tight last week, with an entry at 714.25.
Zscaler’s three-weeks-tight entry is at 250.10. This one deserves a little more caution, because the pattern formed following a fourth-stage base. Three-weeks-tight patterns lose some potency in late-stage situations, so be aware that a breakout from this pattern would carry a bit more risk.
Ugg maker Deckers is queued up in a three-weeks-tight pattern with a buy point at 444.58, about 2% above where the stock finished on Friday. Deckers is sitting on a year-to-date gain of almost 52%.
Nasdaq, S&P 500, Dow Jones Today
The Nasdaq and S&P 500 are two days into rebounds, with the Nasdaq Composite recovering firmly from a dip below 50-day support to end Friday flush with its 21-day exponential moving average. That also puts the Nasdaq a little more than 1% below its record high from Aug. 5, and less than 2% from the index’s first bump above the 15,000 barrier. The Nasdaq is now on positive ground for the month, up 0.3% through Friday.
The S&P 500’s pullback stopped short of its 50-day line, then reversed briskly back above its 21-day level. The index finished on Friday 0.9% from its Aug. 16 peak, and up 1.1% since the start of August — now tracking toward its seventh straight monthly advance.
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After a nice bounce off its 50-day line on Friday, the Dow Jones today will attempt to retake support at its 21-day line. The Dow through Friday had advanced 0.5% in August, now has a firm grip above the 35,000 level, and closed on Friday less than 2% below its record high from Aug. 16.
The iShares Russell 1000 Growth ETF (IWF) also ended last week with a healthy bounce. A two-day rebound left the fund firmly above support at its 21-day line, and just a fraction from its late-July record. The move leaves the fund in a buy range on a rebound from its 10-week moving average. It also places the ETF just below a 284.57 buy point in a four-weeks-tight chart pattern.
Small caps will be key to watch today, after both the Russell 2000 and the S&P Smallcap 600 snapped six-day declines on Friday. For the Russell, the bounce lifted the index back above support at the 200-day moving average. The S&P 600’s turnabout stopped its decline well short of a test of support.
China Markets Bounce, Europe Advances
Markets in Hong Kong and Shanghai bounced back after a tough week, following the rollout of tighter regulations, including sweeping new data privacy rules on Friday. The Shanghai Composite on Monday jumped 1.5%. Hong Kong’s Hang Seng Index grabbed back a 1.1% gain. The rebound carried over into Japan, where Tokyo’s Nikkei 225 rallied 1.8%, despite a slumping dollar.
5 Best Chinese Stocks To Buy And Watch As Beijing Crackdowns Continue
Among China gauges in the U.S. early Monday, the iShares MSCI China ETF (MCHI) was inactive in early action. The Xtrackers Harvest CSI 300 China A-Shares ETF (ASHR) was also unchanged. Technology tracker KraneShares CSI China Internet ETF (KWEB) climbed 0.7%.
Europe’s markets posted uneven gains in afternoon trade. The FTSE 100 in London added 0.3%. The CAC-40 in Paris swung 0.85% higher, while Frankfurt’s DAX defended a 0.2% advance. The SPDR Portfolio Europe ETF (SPEU) rose 0.5% in early trade, after slipping 2.2% last week. The ETF regained support at its 21-day exponential moving average on Friday, trading just below a 44.06 buy point in a nine-week flat base.
Find Alan R. Elliott on Twitter @IBD_Aelliott
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