The Dow Jones Industrial Average reversed lower Tuesday, as Nio stock dived on earnings. Tesla looked to give back part of Monday’s big gain, while Target and Zoom jumped on strong earnings and sales results.
Tesla (TSLA) fell 1.5% Tuesday morning, threatening to give back a small portion of Monday’s gain of more than 6%.
After the stock market close Monday, Zoom Video (ZM) reported strong quarterly earnings results. Zoom stock pared gains to just 3% Tuesday. Meanwhile, Chinese electric vehicle leader Nio (NIO) missed earnings estimates late Monday, sparking a tumble of more than 9%.
Among the top stocks to watch, RH (RH) and Target (TGT) are approaching new buy points amid the current stock market pullback. Target reported strong fourth-quarter results early Tuesday, causing shares to jump.
Dow Jones Today
The Dow Jones Industrial Average fell less than 0.1% in morning trade, while the S&P 500 moved down 0.3%. The tech-heavy Nasdaq composite fell 0.6% in morning trade.
Stock Market Pullback Finds Support
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, the start of March has the Dow Jones Industrial Average, Nasdaq and S&P 500 finding support at key levels.
But Monday’s big gains are a clear step in the right direction. The Nasdaq reclaimed its key 50-day line, while the S&P 500 and Dow Jones industrials also found support around their 50-day lines. If this rebound continues, look for more top stocks breaking out past correct buy points in heavy volume.
According to Monday’s Big Picture, “Judging by Monday’s action, one could certainly venture that equities still remain an attractive option for global investors. The market also reminded IBD readers for a second straight day that another market — specifically, long-dated U.S. Treasury bonds — still matters greatly.”
Amid the stock market pullback, investors should play more defense than offense. Avoid new breakouts, unless they’re exceptional, and make sure to sell any stock that falls more than 7% below your purchase price. Remember, you don’t have to wait for the 7%-8% loss if the stock is clearly not acting well.
Focus on stocks that show strong relative strength during the current weakness. They could be some of the market’s leaders if the indexes are able to continue their rebounds.
Bitcoin added to Monday’s gains, moving back above $49,000 Tuesday. The price of Bitcoin traded around $49,500 in morning trade, according to CoinDesk.
The price of Bitcoin hit an all-time high on Feb. 21, topping out at $58,332.
The Grayscale Bitcoin Trust (GBTC) ETF tumbled 23.8% last week, but still held above its 10-week support level. The Bitcoin-tracking ETF added 2% Tuesday morning.
Dow Jones Stocks: Visa
Inside the Dow Jones Industrial Average, Visa stock is in buy range past a 211.69 buy point in a cup-with-handle base, according to IBD MarketSmith chart analysis. The 5% buy zone goes up to 222.27.
Shares fell 0.2% Tuesday, and are squarely in buy range. The stock ended a two-day losing streak.
Stocks To Watch: RH, Target
Friday’s IBD Stock Of The Day, RH, is closing in on a 524.11 buy point in a flat base. Shares fell 0.3% Tuesday.
IBD Leaderboard stock Target is tracing a flat base with a 200.06 buy point, according to IBD MarketSmith chart analysis. Target earnings and sales topped analyst estimates ahead of the open Tuesday due to a strong holiday season and stimulus checks. The retail giant earned $2.67 a share on sales of $28.0 billion.
Target stock jumped more than 1% at the market open, but remains about 6% below the new buy point.
Chinese EV leader Nio reported a per-share loss of 14 cents on revenue of $1.02 billion, missing fourth-quarter estimates on the bottom line but edging past top-line forecasts.
Nio was expected to narrow its net loss to 7 cents per American Depositary Share from 39 cents a year ago on revenue gains of 148% to $1.01 billion.
The company had already disclosed that fourth-quarter deliveries leapt 111% to 17,353 vehicles, growing for the third-straight quarter after the pandemic hit in early 2020.
Nio ended Monday more than 25% off its 52-week high following last week’s 16.8% tumble. Shares rallied 8.7% Monday.
The Tesla rival triggered a sell signal from a 57.30 buy point when it fell more than 7% below the entry on Feb. 18.
Early Tuesday, Nio stock dived 9% in morning trade.
Zoom earnings soared to $1.22 per share on an adjusted basis, while revenue surged to $882.5 million. That represented gains of 713% and 369%, respectively.
The company was expected to earn 79 cents per share on sales of $811.7 million. Meanwhile, the company issued bullish first-quarter and fiscal 2022 outlooks.
Zoom stock found support around its long-term 200-day line Monday, closing about 30% off its 52-week high.
Outside of the Dow Jones Industrial Average, Zoom shares pared gains to about 3% Tuesday and are moving up the right side of a new base.
Tesla stock raced more than 6% higher Monday, snapping a two-day losing streak. Shares could be forming a new base, but it’s too early to identify a new entry. Tesla fell 1.5% Tuesday.
Last week, the electric-auto leader broke down through its key 10-week moving average line, a critical support level.
On Jan. 25, Tesla stock hit a record high at 900.40, after climbing as much as 93% from a 466 buy point in a cup-with-handle base. Shares are about 25% off that all-time high.
Dow Jones Leaders: Apple, Microsoft
Among the top Dow Jones stocks, Apple advanced 5.4% Monday. Apple stock remains below its 10-week line, but a strong rebound back above the level would be bullish for the stock’s prospects. Shares fell 0.6% early Tuesday.
On Feb. 18, Apple stock triggered the 7%-8% loss-cutting sell rule when it fell more than 7% below its 138.89 buy point in a cup-with-handle base.
Meanwhile, Microsoft dropped 0.8% Tuesday. The stock recently found support at its 232.96 buy point, and is back in buy range.
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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