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Stock Market Rally Picks Up, 3 Giants Restores Buy Points, But Remain Watchful

By September 11, 2020 news

The coronavirus stock market rally rebounded after massive selling in the preceding three sessions. The major indexes closed near session highs.

The Dow Jones Industrial Average climbed 1.6% in Wednesday’s stock market trading. The S&P 500 index rose 2%.

The Nasdaq composite advanced 2.7% after slipping 10% during the prior three sessions. Volume declined in Wednesday’s trade, indicating a lack of institutional buying. In summary,  a positive day, but the stock market direction remains “uptrend under pressure.”

Apple, Tesla, Amazon Revive

Dow Jones stock Apple increased by 4%, but hit resistance at its 21-day line. Zoom Video gained 11%. Tesla soared 11% but just salvaged half of Tuesday’s 21% plunge. 

Microsoft acquired 4.3%, closing a penny below its 50-day line. PayPal rallied 4.65%, above its 50-day. Adobe stock reaped 3.75% and ServiceNow 3.4%, both rallying from the 50-day line while also moving above buy points from recent consolidations.

Amazon stock jumped 3.8% to 3,268.61, back above the 50-day and reclaiming a 3,246.92 buy point. Shares hit resistance at their 21-day and are below the official flat base entry of 3,347.57.

Wednesday’s gain could just be a short-lived bounce in a selling trend. The stock market rally also could potentially hit resistance at the Nasdaq’s 21-day line.

Keep in mind that the stock market rally likely needs to slow down, with a more-gradual ascent. The recent melt-up in Tesla and other tech leaders certainly can’t be sustained. On a monthly chart, the Nasdaq is back to around the top of its long-term trend line going back to 2010. If it can rise at that angle, the stock market rally would be more sustainable.

So right now, there may be limited upside from specific stocks, while the risks of downside, perhaps even serious selling, remain high. The stock market rally could resume selling, testing or breaking recent lows. Investors will likely react accordingly to any bad news on individual stocks.

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