The Dow Jones Industrial Average briefly fell more than 250 points Friday, as IBM and Intel dived on earnings. Apple stock is rapidly approaching a new buy point, while FANG stocks Alphabet and Netflix are in new buy zones.
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Among the Dow Jones leaders, Apple (AAPL) moved down 0.5%, while Microsoft (MSFT) rallied almost 2% in today’s stock market. IBM (IBM)Â and Intel (INTC) both tumbled after reporting earnings late Thursday.
Tesla (TSLA) threatened to fall for a second-straight day Friday, sliding over 1% in morning trade.
A stock in or near a buy zone in the current stock market rally is IPO Leader DocuSign (DOCU). Meanwhile, FANG stocks Facebook (FB) and Amazon.com (AMZN) are approaching new buy points, while Netflix (NFLX) and Alphabet (GOOGL) are in buy zones.
Apple, Microsoft, and Tesla are IBD Leaderboard stocks. Netflix was Wednesday’s IBD Stock Of The Day, while DocuSign was featured in this week’s Stocks Near A Buy Zone column.
Dow Jones Today
On Friday, the Dow Jones Industrial Average traded down 0.8%, while the S&P 500 moved down 0.5%. The tech-heavy Nasdaq composite moved down 0.4% in morning trade.
Among exchange traded funds, Innovator IBD 50 (FFTY) traded 0.6% lower Friday. The Nasdaq 100-linked Invesco QQQ Trust ETF (QQQ) moved down 0.4%. Meanwhile, the SPDR S&P 500 ETF (SPY) fell 0.5%.
Coronavirus Updates
According to the Worldometer data tracker, the cumulative number of confirmed coronavirus cases in the U.S. topped 25.1 million on Friday. Total virus-related deaths rose past 420,000.
The cumulative total of worldwide Covid-19 cases confirmed since the start of the outbreak topped 98.1 million Friday, with more than 2.1 million virus-related deaths.
Stock Market Rally Too Extended?
Looking back at the current uptrend, November was a key month for the stock market. IBD’s The Big Picture flagged the new uptrend following the market’s bullish follow-through day on Nov. 4. Meanwhile, more than halfway through January, the Dow Jones Industrial Average, Nasdaq and S&P 500 made record highs.
Thursday’s Big Picture warned of the extended stock market, “Keep in mind the Nasdaq remains sharply extended from its 50-day moving average, so a pullback is a definite possibility. The composite ended more than 8% above it on Thursday. Historically, when the Nasdaq is about 6% above its 50-day line, it will begin to pull back. On Sept. 2, the Nasdaq closed 11.6% above its 50-day line. Just 12 sessions later, the Nasdaq declined as much as 13% from its highs.”
Investors should continue to use the stock market’s strength to buy breakouts. Be patient and wait for powerful breakouts instead of chasing extended stocks. If the new breakouts work, then add more exposure. But if breakouts start to fail, then you can back away.
In particular, focus on stocks with strong relative strength. Find them by using the relative strength line. The RS line measures a stock’s price performance vs. the S&P 500. If the stock is outperforming the broader market, then the RS line angles upward. If a stock is performing worse than the broad market, then the line will point lower.
Stocks To Watch: IBD Long-Term Leaders
Stocks to watch include IBD Long-Term Leaders, companies with stable earnings growth and price performance. Veeva Systems (VEEV) is the latest addition to the list, as it tries to hold above its 10-week line. Shares are moving closer to an early entry at 292.90, while the conventional buy point remains at 314.09.
Elsewhere in the IBD Long-Term Leaders, Thermo Fisher Scientific (TMO) is approaching a 519.10 buy point in a cup with handle.
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Dow Jones Earnings: IBM, Intel
Dow Jones stocks IBM and Intel tumbled after reporting earnings late Thursday.
IBM dived 10% on mixed Q4 results. The company beat earnings estimates, but missed sales targets. Shares are more than 20% off their 52-week high.
Chip giant Intel slid 8.5% despite beating Wall Street’s targets for the fourth quarter and guiding higher for the current period.
Intel stock is tracing a cup base with a 65.21 buy point, according to IBD MarketSmith chart analysis.
Stocks In Or Near Buy Zones: DocuSign
DocuSign is trading below a 256.10 buy point in a choppy cup with handle. Shares fell 0.7% Friday.
According to IBD Stock Checkup, DocuSign stock shows a strong 98 out of a perfect 99 IBD Composite Rating. The Composite Rating — an easy way to identify top growth stocks — is a blend of key fundamental and technical metrics to help investors gauge a stock’s strengths.
DocuSign stock was featured in this week’s IPO Leaders column.
FANG Stocks To Watch: Facebook, Amazon, Netflix, Alphabet
Facebook looked to extend a four-day win streak Friday, rallying more than 1%. Shares are trying to get back above the 50-day moving average, a key resistance level.
Amazon is rapidly approaching a 3,350.75 early buy point. The conventional buy point looms at 3,552.35, according to IBD MarketSmith chart analysis. Shares inched lower in morning trade.
Google-parent Alphabet is in the 5% buy zone past a 1,843.93 buy point of a flat base following Wednesday’s breakout. Shares rose 0.4% Friday morning.
Wednesday’s IBD Stock Of The Day, Netflix, is testing its 575.47 buy point in a consolidation base amid Friday’s over-1% fall.
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Tesla Stock In Climax Top?
IBD Leaderboard stock Tesla looked to add to Thursday’s 0.6% fall, dropping over 1% Friday morning.
The Jan. 8 IBD Stock Of The Day signaled that Tesla was flashing several signs of a climax top amid a sharply vertical run over the past few weeks. But so far, the stock is showing resilience, as it trades about 4% from its all-time high.
On Jan. 8, Tesla stock hit a record high at 884.49. Shares had climbed as much as 88% from a 466 buy point in a cup with handle.
Dow Jones Leaders: Apple, Microsoft
Among the top Dow Jones stocks, Apple stock fell 0.5% Friday morning. Shares are approaching a new buy point at 138.89, according to IBD MarketSmith chart analysis.
Software giant Microsoft moved up 1.8% Friday, as it breaks out above a 228.22 buy point. An early entry exists at 227.28.
Be sure to follow Scott Lehtonen on Twitter at @IBD_SLehtonen for more on growth stocks and the Dow Jones Industrial Average.
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