As hopes for a new rescue package from Congress kept dwindling, the stock market today showed reluctance to add to last week’s gains. But the Dow Jones Industrial Average, while off more than 1.3%, is giving less than a quarter of its 5.1% advance achieved over the prior three weeks.
The 30-stock Dow industrials, which saw at least eight companies fall 2 points or more, also holds nicely above its 50-day moving average. So, technically the action remains bullish after the Dow posted a follow-through day on Sept. 30.
The Dow’s 50-day line has also been rising since late May, nearly two months after the S&P 500 notched a key follow-through day of its own on April 2, signaling a potential tradable rally under way.
On Monday, the S&P 500 and the Nasdaq also fell in the 1.3% to 1.5% range with an hour to go in the regular session. Volume is running mildly higher vs. the same time Friday on the Nasdaq and lower on the NYSE.
This week marks a big wave of quarterly results. Among leading stocks, they include Leaderboard member Chipotle Mexican Grill (CMG), Netflix (NFLX), Snap (SNAP) and chip equipment giant Lam Research (LRCX).
Netflix, the streaming video giant, reports Q3 results after the close Tuesday. The stock may be forming a handle on its double bottom-style base. Snap recently cleared a 26.86 entry in an 11-week cup without handle.
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Meanwhile, Staar Surgical (STAA) shone brightly with a gain that at one point topped 12%. Volume is running on pace to double its 50-day average level as shares rallied past a 62.61 buy point in a cuplike base.
Notice how the relative strength line is moving in almost vertical fashion now, a good sign. This means in recent days, the smallcap growth stock is sharply outperforming the S&P 500.
The specialist in implants for glaucoma and other eye disorders struggled in the second quarter as Covid-19 forced patients to stay at home. Earnings plunged 79% vs. a year earlier to 3 cents a share as revenue declined 11% to $35.2 million.
However, Wall Street expects a huge turnaround in 2021. Analysts polled by FactSet see the bottom line blasting 121% higher to 62 cents a share. That would be the highest earnings per share since at least 2011.
According to IBD Stock Checkup, Staar gets an 85 Composite Rating on a scale of 1 (horrifying) to 99 (heavenly).
So, an 85 is not bad, but not great.
The Composite Rating measures key fundamental, technical and fund sponsorship factors. In general, those companies with a 90 score or higher tend to have the greatest chance of making the strongest gains during a confirmed market uptrend.
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Innovator IBD 50 (FFTY) backtracked 1%.
Notice on a daily chart how the 21-day exponential moving average is trying to catch up with the ETF’s fine gains so far in the fourth quarter.
Please follow Chung on Twitter at @SaitoChung and at @IBD_DChung for more on growth stocks, chart analysis, bases, breakouts and sell signals.
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