The stock market rally continued Wednesday as the Nasdaq composite and S&P 500 gapped up to new highs. The Dow Jones Industrial Average lagged a bit despite bullish gains for Apple stock and Microsoft stock.
The Nasdaq composite led the way, up 1.9%. The S&P 500 rallied 1.4% and the Dow Jones industrials were up 0.8%. Small caps lagged, with the Russell 2000 up just 0.3%. Volume on the Nasdaq was considerably higher vs. the same time Tuesday. NYSE volume fell a bit.
Among the best ETFs, Innovator IBD 50 (FFTY) faded off highs after rising 2.2% early. The Innovator IBD Breakout Opportunities ETF (BOUT) eased 0.9% after soaring 6.5% Tuesday. The iShares Expanded Tech-Software Sector ETF (IGV) gapped up and held a 2% gain. The VanEck Vectors Semiconductor ETF (SMH) reversed slightly lower after rising 1.6% intraday.
U.S. Stock Market Today Overview
Last Update: 1:10 PM ET 1/20/2021
The stock market continues to perform well despite five distribution days for the S&P 500. That might seem like a high distribution day count, but only one of the days had the feel of true institutional selling. That’s when the S&P 500 slumped 1.5% in higher volume on Jan. 4.
You can monitor the distribution day count and overall stock market health by reading The Big Picture column every day. The column called a new uptrend last year when the S&P 500 marked a follow-through day on April 2, 2020.
Dow Jones Gainers
Inside the Dow Jones, Apple (AAPL) shares jumped 3% ahead of next week’s earnings report. Results are due Wednesday after the close. Apple still boasts a strong technical picture as it sits just below an alternate entry of 138.89, 10 cents above its Dec. 29 intraday high.
Microsoft (MSFT) gapped above its 50-day moving average, rising nearly 4%. It’s in position for a breakout try over a 227.28 buy point. It also reports earnings next week, with results due Tuesday after the close.
Salesforce.com (CRM) was another top gainer in the Dow Jones today, up 3%. CRM stock has been under selling pressure ever since it announced plans to acquire Slack (WORK) in late November. But Salesforce is finding support so far at its 40-week moving average, a longer-term support level.
Netflix Soars On Earnings
In other stock market news, Netflix (NFLX) flashed a buy signal after the FANG stock gapped up on earnings. NFLX stock was near session highs, up 16%. Revenue growth decelerated for the fourth straight quarter, but there were plenty of things to like about the company’s Q4 results. Worldwide subscribers topped 200 million for the first time, while revenue and net subscriber additions came in above expectations. Netflix also said it’s close to being cash flow positive and won’t need to borrow money to fund original programming.
Another FANG stock broke out Wednesday. Google parent Alphabet (GOOGL) broke out from a base-on-base pattern with a 1,843.93 buy point. Shares were up 5% to 1,876 and still well within the 5% buy zone.
Stock market leader Digital Turbine (APPS) was a big gainer in the IBD 50, up nearly 9% to a new high. But it’s a tough stock to buy at current levels because the last time it broke out of a proper base was all the way back in June 2020.
Also in the MarketSmith Growth 250, Five9 (FIVN) broke out over a trend line, rising nearly 5%.
Follow Ken Shreve on Twitter @IBD_KShreve for more stock market analysis and insight.
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