Stocks dropped into moderate losses at Monday’s open, as the market paused atop a four-week rally that left the Dow and S&P 500 sitting on record highs. Materials stocks gained, with Freeport-McMoRan up in a buy range. Nvidia pared losses after U.K. regulators blocked an acquisition. Coca-Cola climbed to the top of the Dow Jones today after its Q1 report.
The Dow Jones Industrial Average pared its early loss to less than 100 points, down about 0.3%. The S&P 500 also notched a 0.3% decline on the stock market today. The Nasdaq Composite backed off 0.7%, with Tesla (TSLA) and a handful of chip stocks dragging on the Nasdaq 100.
Specialty chemicals and lithium producer Albemarle (ALB) moved up 3.5%, to the top of the S&P 500. Evercore ISI upgraded the stock to outperform, with a price target at 200. Oil stocks grabbed six of the 10 largest early gains among S&P 500 stocks.
Ore miner Freeport-McMoRan (FCX) also ran high the S&P 500, up about 1.5%. Freeport-McMoRan is in a buy range above a double-bottom base buy point at 37.71.
Marlin Business Services (MRLN) soared 54% after agreeing to be taken private by HPS Investment Partners at $23.50 per share. Furniture maker Knoll (KNL) spiked 33%, Herman Miller (MLHR) dived 10%, after Herman Miller agreed to buy the company in a $1.8 billion deal.
Dow Jones: Coke Earnings; Apple Refresh
Coca-Cola (KO) led the week’s heavy earnings roster among Dow Jones stocks, gaining 0.8% in early trade. Shares rose 0.5% after reporting first-quarter revenue and earnings handily above analysts’ targets. Management guided toward high-single-digit, low-double-digit earnings growth for 2021.
Like many stocks in the current market, Coke stock is just below a buy point in a cup-with-handle base. Coke is a laggard on the Dow, with a 45 Composite Rating and 34 Relative Strength Rating. But the positive first-quarter results add one more brick to the economic recovery, and the base-and-handle chart action help to reinforce the message of rising strength in the stock market’s confirmed uptrend.
Apple (AAPL) advanced 0.2%, gaining ahead of its virtual product launch event on Tuesday. Wedbush said the event should kick off a major product refresh, with updated iPad models in focus. In addition, DigiTimes reported that Apple was increasing its production of mobil antennae components for use in its updated 5G iPhones.
Both Disney and Apple are basing, with Disney stock working to break resistance at its 10-week moving average and start up the right side of its five week flat base. Apple has a four-week gain under its belt, and is trading about 8% below a cup base buy point at 145.19.
Nvidia, Tesla Stock Weigh On Nasdaq, S&P 500
Nvidia stock pared its premarket loss, opening 0.8% lower after Reuters reported that U.K. regulators planned to intervene in the company’s $40 billion acquisition of SoftBank‘s (SFTBY) U.K.-based ARM Holdings unit. National security concerns were raised by U.K. officials.
Britain’s Digital Secretary Oliver Dowden said: “Following careful consideration of the proposed takeover of ARM, I have today issued an intervention notice on national security grounds,” according to Reuters.
Nvidia stock broke out of a cup base last week. Shares remain in a buy range through 645.75, above a buy point at 615.
Tesla dropped 4.2% in early action. A Tesla crashed Saturday near Houston killed the two passengers — neither was in the driver’s seat, suggesting the Tesla car was using Autopilot or Full-Self Driving features. A first-quarter safety report from Tesla also showed the number of miles driven between accidents while using autopilot had declined, according to Benzinga.
Tesla jumped more than 9% last week, also putting in the first three days of a possible handle. A handle could become valid on a daily chart after Tuesday. The current potential buy point is at 780.89.
Market Vital Signs: Oil, Copper, Bond Yields
Oil prices held near recent highs and copper surged early Monday. Copper jumped 2.3%, to above $4.26 a pound. Prices struck an almost 10-year high at $4.30 on Feb. 24.
West Texas Intermediate oil rose 0.7% to above $63 a barrel, its highest level since mid-March and up 10% from a late-March low. At the beginning of March, WTI had hit $65.05, its highest price since January 2020. Copper and oil prices are both important indicators of confidence in the global economy.
Bond yields edged higher, with the 10-year yield trading at 1.60%, after settling at 1.57% on Friday, according to CBOE data. Yields last week experienced their worst week since July as traders piled back into bonds, a safe haven shelter.
Bitcoin’s Weekend Dive
Bitcoin prices staged a mild bounce, up more than 2% to trade above $56,000 early Monday, after taking a steep dive on Saturday and Sunday, according to CoinDesk. Bitcoin ran up to a new high above $64,800 on Wednesday, ahead of the Coinbase Global (COIN) IPO. Shares dropped below $54,000 on Sunday, but the cryptocurrency remains up more than 90%, after starting the year just above $29,000.
Shares of cryptocurrency exchange Coinbase jumped 36.8% in their first few days of trading last week. The Coinbase IPO priced initially at 250, and Coinbase stock dropped 1.9% early Monday.
CAN SLIM rules advise against jumping into IPOs too early, amid all the initial offering speculation and excitement. It is better to sit and watch the new stock’s chart. Waiting for it to form and breakout from an IPO base helps limit downside risk.
Nasdaq ETF Breakouts
The Invesco QQQ Trust (QQQ) last week broke out from what IBD MarketSmith analysis plots as an eight-week cup base. The ETF remained within the buy range above the 338.29 buy point. The buy zone runs to 356.25.
The leveraged ProShares UltraPro QQQ ETF (TQQQ) flashed very briefly above a 111.96 buy point on Friday. It ended a fraction below the entry, so a potential breakout is still on tap.
The last real breakout for the SPDR Dow Jones Industrial Average ETF (DIA) occurred in November. It has provided a couple buy opportunities on rebounds from 10-week support. The fund ended Friday 18% above its November buy point. For the S&P 500, the SPDR S&P 500 ETF Trust (SPY) is also extended from a November breakout.
Dow Jones Stocks: American Express, Intel Earnings
Johnson & Johnson (JNJ) reports Tuesday. Verizon (VZ) reports Wednesday. American Express (AXP) and Honeywell (HON) report on Friday. Honeywell is extended from a March breakout. Verizon and Johnson & Johnson are basing, but both have work to do before they would be watchlist-worthy stocks.
American Express has formed a tight, five-week flat base sitting atop 10-week support. The buy point is at 151.56, and the stock has easily outpaced the market so far this year, up 25% since Dec. 31. The stock has a weak Composite Rating of 56. And while its relative strength rating is low, at 75, its relative strength line has climbed sharply since October.
For more detailed analysis of the current stock market and its status, study the Big Picture.
Intel‘s (INTC) report on Thursday will be closely watched as a chip-sector indicator. Chip shortages and moves by the likes of Apple (AAPL) and Alphabet‘s (GOOGL) Google to manufacture their own chips have helped muddy the industry’s recovering outlook.
Intel stock has been volatile since clearing a cup-with-handle base in March. That left shares on Friday still in a buy range, which runs to 66.82.
Find Alan R. Elliott on Twitter @IBD_Aelliott
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