GameStop showed the true value of a loss-cutting sell rule, as shares lopped off another 5% to trade as low as 43.22. That represents a 91% free fall from its wallstreetbets brigade-juiced all-time high of 483. Meanwhile, the Dow Jones Industrial Average squeezed an early 1.1% drubbing into a much more manageable drop of 0.3% with roughly an hour to go in Thursday's session.
XGameStop (GME) stock is still up 127% since Jan. 1 amid Thursday's Congressional hearing on extreme market volatility last month in the shares.
The golden rule of investing is to cut losses short — ideally at 7%-8% maximum — and let winners ride.
Watch for strong action after the regular session close by Trade Desk (TTD), Applied Materials (AMAT) and Roku (ROKU). All three have sharply outperformed the major indexes since the coronavirus crash ended on March 23 last year.
IBD called a new uptrend possibly underway on April 2 that same year.
The reason: The S&P 500 staged a key follow-through day with a strong gain on that session in heavier NYSE turnover vs. the prior session.
That important up day came on Day 8 of a new rally attempt after the key indexes completed their bear-market declines.
On Thursday, other key indexes whittled down significant morning losses.
The S&P 500 fell roughly 0.4%, while the Nasdaq 100-tracking Invesco QQQ Trust (QQQ) trimmed its loss to 0.6% after being down more than 1.5%.
Notice on a daily chart on either MarketSmith or Leaderboard how QQQ is making a test of institutional buying support at the 21-day exponential moving average.
Beyond GameStop: 2 New Breakouts
Meanwhile, Wells Fargo (WFC) held firm after Wednesday's notable breakout.
Please see annotations on WFC's daily and weekly charts at Leaderboard to identify the right buy point and the 5% buy zone.
Wells Fargo is benefiting from a likely removal of growth-hurting restrictions from the Federal Reserve; please read more in this new IBD Stock Of The Day story.
Will Wix.com Be A 2021 Market Leader?
Wix.com (WIX), discussed on the IBD Live show Thursday, also made a stunning breakout.
The website design expert blasted past the top of a nearly six-month consolidation base that showed a 319.44 buy point.
Shares jumped 13% in massive turnover that is already the highest for a single day since August. The 5% buy zone goes up to 335.41.
Notice how the stock frequently hit upside resistance near 300 as it carved out a new chart pattern.
Thus, one could have bought shares as it cleared near-term resistance at 298.84, 10 cents above the Oct. 14 intraday high.
Wix posted a net loss of 3 cents a share in the fourth quarter, but sales growth accelerated, up 38% to $282.5 million. The company notched year-over-year top-line increases of 24%, 27% and 29% in the prior three quarters.
For now, the Street expects Wix.com to post a net loss of 31 cents a share in 2021 vs. red ink of 44 cents in 2020, then bounce back into the black with profit of 38 cents a share in 2022.
Wix.com, a large cap, has 55.4 million shares outstanding.
According to IBD Stock Checkup, Wix gets a 55 Composite Rating on a scale of 1 (wizened) to 99 (wizardly). A net loss in 2020, puncturing the stock's Earnings Per Share Rating to 7, indeed hurts the composite score. However, the stock's 82 Relative Strength Rating, a sharply rising relative strength line and B- Accumulation/Distribution Rating are clearly going in Wix's favor. Shares are now up 37% year to date.
In Other Markets
Investors took a break from selling long-dated U.S. government bonds following another week of dour numbers on the jobs front.
The Labor Department reported initial jobless claims for the week ended Feb. 13 jumped to 861,000, eclipsing the Econoday forecast of 773,000. The prior week's total got revised higher to 848,000 initial claims. Meanwhile, the Philadelphia Fed's monthly manufacturing survey fell in February to 23.1, vs. 26.5 in January, yet still beat the consensus forecast of 20.
The yield on the benchmark Treasury 10-year note held at 1.29%, but that's still up sharply from 0.93% at the start of 2021.
Three-month T-bills remain ultra low at 0.03%.
On Friday, the 30-year long bond's yield rebounded back above 2% and is now at 2.08%.
Oil and gas stocks reversed lower Thursday amid a 1% backtrack in West Texas Intermediate crude oil futures to $60.52 a barrel.
Please follow Chung on Twitter: @saitochung and @IBD_DChung
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