Stocks crept narrowly higher Tuesday, as the market felt for direction after Monday’s brisk pullback. Growth stocks and small caps showed early strength, although the overall early mood was tentative, after President Donald Trump on Monday declared a state of emergency in Washington, D.C., and the Pentagon called up 10,000 troops for deployment to the capital. Still, electric vehicle makers Tesla and Xpeng popped into early rebounds. Rent-A-Center, Shopify and Datadog rose toward or beyond buy points. Goldman Sachs led the Dow Jones today, boosted by an anlayst price target hike.
The Dow flashed briefly higher at the starting bell then slumped to a 0.1% decline. The S&P 500 traded flat on the stock market today, while gains by Baidu (BIDU), Tesla (TSLA) and Nvidia (NVDA) helped prop the Nasdaq’s 0.1% advance.
Small caps were off to a positive start, with the iShares Russell 2000 ETFIWM rising 0.8%, as WW International (WW), the old Weight Watchers, rallied 6.7%. Luminex (LMNX) jumped 3.5% after guiding fourth-quarter and 2021 revenues above analyst targets.
Growth stocks also showed early strength, with Ithe nnovator IBD 50 ETF (FFTY) adding 1.1% in early trade.
The Nasdaq led the market’s pullback on Monday, pausing for at least some brief consolidation after flashing some mild signs of overheating after its 15.4% fourth-quarter rally. While investors appeared to rotating away from growth stocks, many leaders still had a good day, sending the Innovator IBD 50 ETF up 1% in its third-straight advance.
Stocks to watch for Tuesday include Rent-A-Center (RCII), which ended Monday in a buy range above a 41.52 buy point in a bullish ascending base pattern. Shopify (SHOP) has been bobbing over and under a buy point at 1,147.01. Datadog (DDOG) is hunkered down just below a 111.59 buy point in a cup-with-handle base.
Dow Jones Today: Walmart To Jump Into FinTech
Walmart (WMT) climbed higher on the Dow Jones today, up 0.8%, after announcing it would launch a fintech start-up in partnership with Ribbit Capital. Ribbit is one of the venture capital firms backing the online trading platform Robinhood. CNBC reported the company’s board would include Walmart U.S. Chief Executive John Furner, Walmart Chief Financial Officer Brett Biggs and Ribbit Capital managing partner Meyer Malka. The company planned growth through acquisitions and partnerships.
Walmart shares rose 22% in 2020. They are up 2.2% so far in January. The stock is hsaped a seven-week flat base with a 153.76 buy point, according to MarketSmith chart analysis.
Goldman Sachs (GS) also pounced higher on the Dow, rallying 1.5%, after JPM Securities raised the stock’s price target to 320 from 285 ahead of Goldman’s fourth-quarter report on Jan. 19. Goldman stock is working on 11 straight weekly advances, and is up more than 30% following a breakout in November.
S&P 500: Tesla, Enphase
Etsy (ETSY) raced 7.5% higher, grabbing the top slot among S&P 500 stocks. THe move lifted shares out of a buy range above a 21-week moving average entry at 174.65. Etsy was Monday’s IBD Stock Of The Day.
Tesla also traded high on the S&P 500. So did Enphase Energy (ENPH), up 1.8% after Truist initiated coverage with a buy rating and a 254 price target. Oil issues also bolstered early action, with oil-related stocks representing five of the top 10 early gains among S&P 500 stocks.
IBD Leaderboard listing Upstart Holdings (UPST) rallied 5% in early action. The volatile IPO is extended just beyond the buy range of an IPO base buy point at 51.50. Shares are up 175% from their December 16 IPO price.
Central Garden Pet (CENTA) is trading below several potential buy points. The standard entry would be a 41.20, but the stock is also shaping a possible handle, which could provide a lower entry point.
China Stocks In Motion: Baidu, Futu
China-based stocks once gain flashed early signs of strength. Baidu led the Nasdaq 100, up 3%. But Baidu’s positive premarket trade on Monday devolved into an 8.6% drop during the regular session.
On the IBD 50 list, Futu Holdings (FUTU) rallied 7%. The online trading platform soared more than 31% above a 51.20 buy point after a breakout last week, then pulled back almost 5% on Monday. The stock has technically triggered the eight-week hold rule for the second time in two months, a rarity. But the nature of the Chinese initial public offering gives that hold rule some specific qualifications of which investors should be aware.
Bitcoin Approaches $36,000; Marathon, MicroStrategy Jump
Bitcoin rebounded more than 6% in early trade, then flatted to trade just above $33,400 Tuesday, according to CoinDesk. That was up from an early low around $30,525, but still below Friday’s high at $41,529. Despite the pullback, Bitcoin remains up almost 22% since the start of January, after rallying more than 50% in December.
Among Bitcoin-related stocks, Marathon Patent Group (MARA) bounced 4% higher. MicroStrategy (MSTR) shed early gains and slipped 0.7%. IBD Leaderboard stock PayPal Holdings (PYPL) also reversed lower, down 0.5%. PayPal stock is extended, up a bit more than 10% since clearing a cup base buy point at 215.93.
State of Emergency, Troops Called Up
On Monday, President Donald Trump declared a state of emergency in Washington, D.C. The order enables the Federal Emergency Management Agency and Department of Homeland Security to mobilize federal resources, “to save lives and to protect property and public health and safety, and to lessen or avert the threat of a catastrophe in the District of Columbia.”
The city itself had been under a state of emergency ordered by Mayor Muriel Bowser, since pro-Trump supporters ransacked the Capitol building on Wednesday. The Secret Service and Department of Homeland Security have broadened their National Special Security Event status due to security concerns in the lead-up to the Jan. 20 inauguration of Joe Biden and Kamala Harris.
The Military Times reported Monday the Defense Department had called up 10,000 National Guard troops into the city, and had authorized more.
“Right now we have 10,000 inbound and we’re authorized to go to [15,000],” National Guard Bureau Chief Gen. Daniel Hokanson told the Times. Hokanson declined to say whether the troops would be armed, but said plans were to “work very closely” with law enforcement to determine if there is a need for that, the Times reported.
25th Amendment, Impeachment, FBI Warning
The House today will vote today on a resolution calling on Vice President Mike Pence to “convene and mobilize the Cabinet to activate the 25th Amendment to declare the President incapable of executing the duties of his office, after which the Vice President would immediately exercise powers as acting President.” A blog from historian Heather Cox Richardson notes the resolution does not address the physical or mental health of the president, but focuses instead “on his inability to fulfill his duty to respect the legitimate results of the Presidential election,” and to accept the peaceful transfer of power.
If Pence does not act on the resolution by Wednesday, House Leader Nancy Pelosi said the House will take up impeachment proceedings. The House could impeach as early as this week. The Senate does not fully reconvene until Jan. 19, suggesting a trial would not occur to potentially follow up the impeachment with a conviction until after Biden has taken over the presidency.
Acting Homeland Security Secretary Chad Wolf resigned late Monday, ceding control of one of the key departments overseeing security for the inauguration to Federal Emergency Management Agency head Pete Gaynor. Gaynor has officially been in his role at FEMA since January 2020. Wolf is the third Trump cabinet member to resign since last Wednesday’s events at the Capitol. The White House, Justice Department, FBI and Department of Homeland Security have provided no briefings in the interim.
ABC News reported that a memo from the FBI warned government agencies about “far-right extremist groups” planning demonstrations at all 50 state capitol buildings during the Jan. 16-17 weekend, ahead of the Jan. 20 inauguration. Information said groups could storm government offices, A statement released by the FBI said, “Our focus is not on peaceful protesters, but on those threatening their safety and the safety of other citizens with violence and destruction of property.”
EV Makers: Tesla, Xpeng Climb
Luxury electric automaker Tesla bounced 3% in early trade, after a 7.8% retreat on Monday snapped an 11-day win streak. Monday’s Big Picture noted: The electric vehicle maker’s skyrocketing move since mid-November has given it a market capitalization close to $770 billion, making it the sixth-largest company on the Nasdaq. Thus, Tesla’s 7.8% slide Monday was a big influence on the index, and will continue to be one.
Among other EV makers, China-based Xpeng (XPEV) clawed up 3.5% after entering into a $1.98 billion credit agreement, with plans to use finds to support and expand its operations. Xpeng stock has been hugging its rising 50-day line, attempting to climb off the floor of a seven-week, 50% deep correction. Shares are up about 196% from their August initial offering.
Dow Jones Today: Chevron Follows Oil Prices Higher
Chevron moved up 1%, trading high on the Dow Jones today, as West Texas Intermediate oil prices climbed to their highest level since late February. WTO moved up 0.6% to $52.84 per barrel, after International Energy Agency Executive Director Fatih Birol told Bloomberg that U.S. shale oil was necessary in the short-term to fill the global gap in supply versus demand.
But Birol warned that shale producers should not underestimate the electrification of the transportation sector, and should be cognizant of crude’s declining share of the future global energy mix.
Find Alan R. Elliott on Twitter @IBD_Aelliott
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