Dow Jones Falls Mildly, Twitter Pounded, Bitcoin ETF Plunges 18%; Time To Take Profits?

The stock market today took the latest news of a potential removal of embattled President Donald Trump from office in stride, as blue chip stocks showed normal-looking pullbacks. The Dow Jones Industrial Average, which surged 1.6% during the first trading week of 2021, gave up a measly 0.3% on Monday.


That stopped a four-day win streak.

However, notice on a daily chart on MarketSmith how the blue chip index shows a nice cushion above its rising 21-day exponential moving average since bouncing off it early last week.

On IBD Live, panelists use MarketSmith daily charts that show the 21-day line in green. The short-term 10-day moving average is drawn in pink, the 50-day in red.

Meanwhile, Innovator IBD 50 (FFTY) ETF scorched the key equity benchmarks on Monday, as its 1% gain stood in stark contrast with losses of more than 0.6% in the S&P 500 and more than 1.2% in the Nasdaq composite. Meanwhile, some top retailing stocks thrived. See some of them in IBD Stocks On The Move.

Volume fell on both exchanges vs. Friday, early data showed.

Some social media firms tanked amid news that Trump has been blocked indefinitely from Twitter’s platform. Twitter (TWTR) gapped sharply lower on the news on Monday and fell 6% in nearly quadruple average trade.

However, despite Monday’s big drop, TWTR stock actually is keeping a solid uptrend intact.

The stock is fighting to hold its 50-day moving average.

Beyond Dow Jones: Take Profits In Bitcoin?

Elsewhere, Bitcoin caught its breath.

The Grayscale Bitcoin Trust (GBTC) plunged 18% in the second heaviest turnover so far in 2021.

Now, GBTC has made a spectacular run since its breakout was noted on the IBD Live show in October.

The so-called open-ended grantor trust broke out of a cup base with a 14.88 buy point late that month, and never looked back. GBTC went on to rally 226% to last week’s peak of 48.65.

Monday marked the biggest single-day point decline for the bitcoin ETF since the beginning of the run. This is a key sell signal. Thus, investors could decide to lock in at least partial profits.

At this point, watch for a potential test of support at the 21-day line.

The 50-day moving average has risen sharply in recent weeks, but is still lagging the price action by a long way. So it really does not serve as a useful sell signal at this point.

Also In Stocks On The Move

Semiconductor stocks also had a good Monday.

Taiwan Semiconductor (TSM) (TSMC) took back all of Friday’s 2.3% loss and more. Shares in the chipmaking giant rose 3.3% in heavy volume, extending gains past a 3-weeks-tight follow-on entry point of 107.94.

TSMC is a half-size position in IBD Leaderboard. The company is slated to report Q4 results on Thursday.

Earnings at TSMC have grown 19%, 95%, 93% and 46% vs. year-ago levels in the past four quarters. The four-quarter average of 63% year-over-year growth more than meets the C in CAN SLIM, IBD’s seven-point paradigm for winning in the growth stock investing game.

KLA (KLAC) boosted 2.1% higher in accelerating volume, a bullish sign as the expert in semiconductor manufacturing process control and yield management moved further above a tight area of trading that resembles a shelf pattern.

KLA has also gone up 32% since its second breakout attempt past a 218.67 buy point in a cup without handle.

Consider taking at least some gains at 20% to 25% past a proper buy point.

Please follow Chung on Twitter: @saitochung and @IBD_DChung


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