Dow Jones Dives As Apple, Tesla Earnings Loom; AMC Stock Skyrockets 300%

The Dow Jones Industrial Average briefly dived more than 575 points Wednesday morning before cutting losses, as Apple earnings and Tesla earnings loomed after the close. The social media-fueled GME stock short squeeze continued, while fellow short-squeeze target AMC stock skyrocketed over 300%.




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Among the Dow Jones leaders, Apple (AAPL) rallied 0.1% before its earnings results, while Microsoft (MSFT) extended gains to 2.7% after reporting earnings in today’s stock market.

Tesla (TSLA) looked to extend a three-day win streak Wednesday, rallying 0.6% ahead of the company’s earnings after the close. Shares are trading just off Monday’s all-time highs. Advanced Micro Devices (AMD) dived 5% despite strong earnings results.

GameStop (GME) soared as much as 190%, while AMC Entertainment (AMC) briefly skyrocketed 310%.

Stocks in or near buy zones in the current stock market rally are C3.ai (AI) and IPO Leader Datadog (DDOG).

AMD, Apple, Microsoft and Tesla are IBD Leaderboard stocks. Microsoft and Datadog were featured in this week’s Stocks Near A Buy Zone. C3.ai was Tuesday’s IBD Stock Of The Day.

Dow Jones Today

On Wednesday, the Dow Jones Industrial Average traded down 0.9%, while the S&P 500 fell 1.05%. The tech-heavy Nasdaq composite pared its loss to 0.75% in morning trade.

Among exchange traded funds, Innovator IBD 50 (FFTY) traded down 1.4% Wednesday. Nasdaq 100 tracker Invesco QQQ Trust ETF (QQQ) lost 1%. Meanwhile, the SPDR S&P 500 ETF (SPY) dropped 1.1%.

U.S. Stock Market Today Overview

Index Symbol Price Gain/Loss % Change
Dow Jones (0DJIA) 30641.19 -295.85 -0.96
S&P 500 (0S&P5) 3809.33 -40.29 -1.05
Nasdaq (0NDQC ) 13532.89 -93.18 -0.68
Russell 2000 (IWM) 211.44 -1.86 -0.87
IBD 50 (FFTY) 44.85 -0.62 -1.36
Last Update: 11:00 AM ET 1/27/2021

 


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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.

Tuesday’s Big Picture commented, “On Tuesday, the broader picture showed a relative lack of fresh institutional demand for equities. Yet the big boys and girls on Wall Street also weren’t so eager to dump a major supply of shares onto the public, either.”

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 break out past 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 trying to break out above a 519.10 buy point in a cup with handle.


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Dow Jones Earnings: Microsoft

Dow Jones leader Microsoft smashed earnings and sales estimates late Tuesday. The company earned $2.03 a share on sales of $43.08 billion in the quarter ended Dec. 31. Analysts expected Microsoft earnings of $1.64 a share on sales of $40.18 billion.

Shares of the software giant broke out past a 228.22 buy point in recent sessions, according to IBD MarketSmith chart analysis, and were climbing out of buy range amid Wednesday’s strong gain. The buy zone goes up to 239.63.

Stock Market Earnings: AMD Stock

Advanced Micro Devices tumbled nearly 5% despite reporting better-than-expected earnings and sales results late Tuesday. AMD earned 52 cents per shares on sales of $3.24 billion. Analyst forecast EPS of 47 cents on revenue of $3.02 billion.

The graphics-chip maker was paring losses, after breaking support at its 50-day support level.

Stocks In Or Near Buy Zones: C3.ai, Datadog

Tuesday’s IBD Stock Of The Day, C3.ai, is rapidly approaching a 151.94 early entry. The conventional buy point is at 184 due to a forming IPO base.

Shares reversed 1% higher Wednesday morning.

Datadog briefly topped a 111.59 buy point in a cup with handle Monday, according to IBD MarketSmith chart analysis. But shares triggered the 7%-8% loss rule from the entry amid the recent weakness. Wait for a new buy point to offer a new opportunity. Shares slid 2.5% Wednesday morning and are testing their 50-day line.

According to IBD Stock Checkup, Datadog stock shows an 88 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.


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GME Stock, AMC Short Squeeze

The GME stock short squeeze continued Wednesday morning, as shares surged as much as 156% to top out at 380. GameStop pared gains to about 140%. Trade was briefly halted after the stock triggered a circuit breaker.

Late Tuesday, Tesla CEO Elon Musk tweeted “Gamestonk!!” in reference to the Reddit-led mass short squeeze. Melvin Capital, which had been a high-profile short seller of GME stock, closed out its short position on Tuesday, the hedge fund’s manager told CNBC.

Another short-squeeze play, AMC stock, skyrocketed as much as 310% Wednesday morning to 20.36 before trimming gains to 212%.

Tesla Stock

IBD Leaderboard stock Tesla rose about 0.5% ahead of the company’s earnings after the stock market close Wednesday. The electric-auto leader is expected to earn $1.00 a share on revenue of $10.4 billion.

The Jan. 8 IBD Stock Of The Day column 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 tremendous resilience, and it hit record highs Monday.

On Monday, Tesla stock hit a record high at 900.40. Shares are about 89% above a 466 buy point in a cup with handle.

Dow Jones Leaders: Apple Earnings

Among the top Dow Jones stocks, Apple stock moved up 0.1% Wednesday. Shares are in the 5% buy zone above a new buy point at 138.89, according to IBD MarketSmith chart analysis.

Apple earnings are due Wednesday after the close. The iPhone maker is expected to earn $1.41 a share on revenue of $103.1 billion.

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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