The Dow Jones Industrial Average plunged lower again amid a broad sell-off amid a worldwide spike in coronavirus cases, with the Nasdaq losing a key technical support level. A number of IBD 50 stocks also flashed sell signals. General Electric (GE) was a notable winner, however, rising on surprise earnings.
XCoronavirus Cases Spike
According to the Worldometer data tracker, the cumulative number of confirmed coronavirus cases in the U.S. topped 9 million on Wednesday. Total virus-related deaths rose past 232,000.
The cumulative total of worldwide Covid-19 cases confirmed since the start of the outbreak topped 44.3 million Wednesday, with more than 1.17 million virus-related deaths.
Hospitalizations are rising again in the U.S., though they remain well below the heights reached in July. Daily deaths also remain stable below the 1,000 mark. Nevertheless, U.S. Assistant Secretary of Health Adm. Brett Giroir said on the Today show the nation is at "another critical point in the pandemic response."
U.S. Stock Market Today Overview |
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|---|---|---|---|---|
| Index | Symbol | Price | Gain/Loss | % Change |
| Dow Jones | (0DJIA) | 26757.33 | -705.86 | -2.57 |
| S&P 500 | (0S&P5) | 3304.15 | -86.53 | -2.55 |
| Nasdaq | (0NDQC ) | 11108.42 | -322.93 | -2.82 |
| Russell 2000 | (IWM) | 154.47 | -3.71 | -2.35 |
| IBD 50 | (FFTY) | 36.74 | -0.90 | -2.39 |
Last Update: 12:00 PM ET 10/28/2020 |
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S&P 500, Nasdaq Fall
The S&P 500 fell by 2.4% amid the broad pullback. Meanwhile the tech-heavy Nasdaq was down an even worse 3.1% before shaving that decline to around 2.7%. This move saw it knife through its 50-day moving average. Losing this key technical support level is a bearish sign.
Volume was concerning as the bears battered the bulls. It was well up on both the NYSE and the Nasdaq. It was up around 60% on the NYSE vs. the same time Tuesday, according to early data. Trading was up by around 54% on the Nasdaq. CAN SLIM investors prefer for volume to be lower on a down day.
All sectors were down, with energy, technology and communication services the worst performers.
The Innovator IBD 50 ETF (FFTY) was also battered lower, slipping by 2.6%. There were just a handful of winners on the IBD 50, led by Meridian Bioscience (VIVO), which gained 4.3% and D.R. Horton (DHI), which was up 1%.
Visa, Apple Stock Down As Dow Jones Bleeds Red
The Dow Jones Industrial Average was slammed lower as bears went on the rampage. At around 12:10 p.m. ET, the index trimmed some losses but still fell by 2.4%, with all but one component slipping lower.
The worst performers included American Express (AXP), which dipped 3.2% and Apple (AAPL), which surrendered 3.4%. The move saw Apple stock lose further ground on its 50-day line.
Insurance giant Travelers (TRV) was the sole winner, managing to gain 2.5% and reversing sharply off its intraday low of 116.33.
IBD 50 Stocks Flash Sell Signal
For a market leader, the 50-day moving average — which computes a running average of price closes over the past 50 trading sessions — acts as a resistance level during a downtrend.
If a stock breaks below the 50-day line in heavy volume and can't rally back, it's often a signal that buying demand is drying up and the stock's run is ending. One or two bursts of institutional selling often act as a prelude to more profit taking ahead. It can take a fund several weeks to exit a position due to the amount of stocks it holds.
A number of IBD 50 stock lost their 50-day lines amid the bearish sell-off, though there is time yet for them to regain this medium-term moving average. They include names such as Amazon (AMZN), PayPal (PYPL), Microsoft (MSFT), Nvidia (NVDA) and Intuit (INTU). This is in addition to the likes of Digital Turbine (APPS), Fortinet (FTNT), Lam Research (LRCX) and Horizon Therapeutics (HZNP).
Investors should keep a close eye on these stocks to see how they perform in the coming sessions.
GE Stock Surges
Shares of General Electric jumped nearly 9% to 7.73 on the stock market today. GE stock is working on an 8.67 buy point off a cup base that's part of a bigger, far-deeper consolidation. However, the industrial giant has been meeting resistance at the 200-day line.
GE stock got a big boost after the firm handily beat Wall Street earnings expectations. The firm avoided an expected outright loss in the third quarter. Instead earnings fell 60% to 6 cents a share as sales sank 17% to $19.4 billion. Aviation revenue tumbled 39%, with health care revenue off 7%. Power segment revenue grew 3%, with renewable energy up 2%.
Nevertheless, GE burned through $4.3 billion in cash in the first half of 2020, due to its weak commercial aviation business. On the second quarter earnings call on July 29, Culp warned that the "macro environment could deteriorate further" and forecast a lengthy aviation recovery.
This Stock Breaks Out
Pet products e-commerce retailer Chewy (CHWY) broke out from a cup with handle with a 70.82 buy point. Chewy's relative strength line also hit a new high, which is a bullish indicator.
It spiked on the news the firm is launching a telehealth service for pets. The "Connect-with-a-Vet," which launched Wednesday, allows customers to get advice in real time from a licensed vet about their dogs or cats. It is free for customers who are part of Autoship subscription program, which sends deliveries of food and other goods.
Please follow Michael Larkin on Twitter at @IBD_MLarkin for more on growth stocks and analysis.
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Dow Jones Plunges As Coronavirus Cases Soar, GE Stock A Rare Winner - Investor's Business Daily
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