Stocks opened lower then turned mixed Tuesday, pausing after Monday's strong session. Illumina, Green Brick, Cara Therapeutics and GreenBox POS were early standouts. Goldman Sachs led the Dow Jones today, rising in a buy range on a rebound from support.
XThe Dow industrials trimmed its early drop to a fraction, while the S&P 500 reversed its decline and rose 0.1% to retake Monday's record high. The Nasdaq Composite also reversed, rising 0.2%, as genetic analysis pioneer Illumina (ILMN) rocketed more than 8% to lead the Nasdaq 100 and S&P 500.
Oil-related stocks crowded the top of the S&P 500, as oil prices rose and oil giant BP (BP) moved up a debt reduction target, after what it called a "very strong business performance during the first quarter." BP shares jumped 3.9%.
IBD 50 stock Green Brick Partners (GRBK) rallied more than 4%, breaking out past a 25.15 buy point in a 20-week cup base. The buy range runs through 26.78.
Still, investors were not in a forgiving mood, sending railcar and container freight leader Greenbrier (GBX) down more than 6% on mixed results for its fiscal second quarter. Payroll processor Paychex (PAYX) tumbled 5.7%, despite third-quarter results that met analyst expectations.
Small caps ran narrowly ahead, withthe Russell 2000 up 0.4%. Cara Therapeutics (CARA) jumped 12% to trade high on the index. Standard & Poor's announced late Monday the Stamford, Conn.-based biotech would replace MTS Systems (MTSC) on the S&P Smallcap 600, effective on Thursday. Cara broke out on Monday from what IBD MarketSmith analysis charts as a seven-week cup base.
Shares of February new issue GreenBox POS (GBOX) rallied 15% in early action. The blockchain ledger-based payment processor announced transaction volumes "materially" outpaced the company's original expectations. Shares finished Monday in a buy range, above a 15.45 buy point in a six-week IPO base.
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Illumina Upgrades Outlook
Illumina shares are testing support at their 40-week moving average, after pulling back sharply from their February highs. The stock soared in February, after delivering a strong 2021 outlook. Shares crashed back to earth, and then some, in March after the Federal Trade Commission challenged the company's $7.1 billion takeover of liquid biopsy company Grail.
Late Monday, the San Diego-based outfit said it expected first-quarter revenue to top $1 billion, with $1.4 billion in orders. Management also predicted full-year revenue growth of 25% to 28%, vs. the 17% growth target expected by analysts. Shares ended Monday up 3.8% so far this year.
Dow Jones Today: Microsoft, Intel In Buy Ranges
More than a third of the blue chips on the Dow Jones today are trading in buy ranges or below valid buy points. Microsoft (MSFT) remains in buy range after clearing its 246.23 entry on Monday. Microsoft stock remains in its buy range through 258.54. Microsoft, an IBD Leaderboard listing, dipped 0.5% in early trade.
The recent rebound among chip stocks has left Intel (INTC) high in a buy zone, with a range running through 66.82. Intel shares slipped 0.7% at the open.
The strengthening of bond yields has put financials in focus. JPMorgan (JPM) and Goldman Sachs (GS) both pulled back in tests of their 10-week moving averages. Goldman Sachs jumped 1.3% in early trade, putting it in a buy range on a rebound from support. In addition, JPMorgan is below a three-weeks-tight buy point at 161.79.
Europe Rallies, Bonds Steady, Ethereum Hits Record
Stock exchanges in Shanghai, London, Frankfurt and Paris reopened on Tuesday following the holiday weekend. Shanghai reopened to a fractional loss, while Tokyo's Nikkei 225 dropped 1.3%. In Europe, stocks rallied into afternoon trading, playing catch up to the U.S. advance on Monday. London's FTSE 100 jumped 1.3%, with Frankfurt's DAX rising 1% and the CAC-40 in Paris showing a 0.5%.
Crude oil prices bobbed higher after taking a dive on Monday. West Texas Intermediate futures had dropped 4.5% Monday, settling below $59 a barrel. But WTI futures gained almost 2% early Tuesday, to near $60. Brent crude moved up 1.7% to above $63.
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Bonds were effectively flat, after a modest pullback in yields on Monday. The 10-year yield shed 1 basis point to 1.69% in early trade. Yields have staged a rapid recovery from record lows of around 0.50% in August. They skirted pre-pandemic levels last week, climbing above 1.76% — the highest level since January 2020. Yields had started 2020 at around 1.8%, which was down from about 2.7% a year earlier.
Bitcoin edged higher, trading up 1% to above $58,000, according to CoinDesk. The cryptocurrency climbed to a record high at $61,556 on March 13. Competing cryptocurrency Ethereum climbed more than 2%, to above $2,100. Ethereum touched a new record high above $2,151 on Monday night.
Dow Jones Today: Chasing The Small-Cap Lead
The Dow industrials and the S&P 500 bagged fresh highs during Monday's session. But the Nasdaq and the small cap Russell 2000 might be better indicators of the improvement in market strength. The Nasdaq stepped up to a third-straight gain, closing with a cushy 2% margin above its 50-day moving average. That was its best finish above that level of support since March 1.
For more detailed analysis of the current stock market and its status, study the Big Picture.
The Russell 2000 has now climbed in five of the past seven sessions, ending Monday 1.6% above its 50-day, with a slightly narrower gain above its 21-day line. Re-establishing support is not a guarantee that the market will move higher. But it does suggest institutional money is forming a technical bulwark on which to base further gains.
Year-to-date, the Dow industrials ended Monday with a 9.5% gain, and the S&P 500 is up 8.5%. The Nasdaq has gained 6.3% and is now just 3% off its record high from Feb. 16. Meanwhile, the Russell 2000 has a year-to-date gain of 14.7%, and is now within 4% of its mid-March peak.
Find Alan R. Elliott on Twitter @IBD_Aelliott
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