After peaking at 32,009 just two weeks ago, the Dow Jones Industrial Average has tanked more than 1,460 points, or 4.5%. But it is trying to bounce off session lows. Stocks today got hammered by confusion over comments on financial markets by the head of the U.S. central bank.
Bitcoin, which recently surpassed $52,000, fell more than 4% to $43,038. Ethereum, another digital currency growing in popularity, fell nearly 3.7%.
Federal Reserve Chair Jerome Powell noted that he’s concerned about potential dislocation in the financial markets but did not make any suggestion that it’s time to immediately rethink policy on the cost of lending.
Powell and other Fed board governors are slated to meet on Tuesday and Wednesday in the next FOMC meeting.
Beyond Dow Jones
Meanwhile, new breakouts have lost traction.
At Thursday’s session low of 30,547, the blue chip Dow fell as much as 2.3% and sliced below its critical 50-day moving average. The Dow industrials are trying to trim those severe losses in the final hour of trading and at around 3:05 p.m. stooped 1.2% lower. The Nasdaq got hit harder, falling around 2%; the S&P 500 slid nearly 1.3%.
Small caps also got throttled by sellers; iShares Russell 2000 (IWM) at one point fell more than 3% and clipped its own 50-day moving average for the first time since late October. The Innovator IBD Breakout Opportunities (BOUT) exchange traded fund plunged 6.1%.
In a healthy market, key equity indexes trade above their 50-day lines — which plot a stock or index’s average closing price over the past 50 trading sessions — and lead them higher.
On Feb. 25, IBD made a downward revision on the current outlook for stocks.
A New Rally For Energy?
Meanwhile, a decision by OPEC and Russia to extend current cuts in producing oil to April fortified buying in the commodity. West Texas Intermediate futures jumped 3.6% to $63.53 a barrel, extending a year-to-date gain to almost 31%.
The trio currently make the watchlist of top stocks on IBD Live.
Chevron recently cleared resistance near 95 and has risen admirably.
Notice how the relative strength line has been rising sharply since early February. This means the megacap energy stock has been outperforming the S&P 500 in a big way.
More specifically, Chevron surpassed a 95.92 buy point in a long, deep bottoming base. From November to early January, CVX formed a mediocre handle with an intraday high of 95.82. Add 10 cents to the highest price within the handle to find the correct buy point.
The Jan. 14 breakout attempt sputtered. But Chevron went on to form a second handle, and this one featured fewer down days in heavy volume.
A new buy point at 96.41 emerged.
CVX has gained 11.5% from this new pivot point.
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