Stock Market Rally Continues, But Key Levels Not Yet Breached

Strategic Insights -

The stock market rally showed signs of strength, with the Dow Jones, S&P 500, and Nasdaq composite indices moving closer to their 21-day moving averages. However, the major indexes still have a significant way to go before reaching their falling 50-day and 200-day moving averages. Megacaps such as Apple and Microsoft made strong gains, but only Microsoft stock closed above its 21-day moving average. Leading stocks, including Arista Networks, Enphase Energy, Paylocity, On Semiconductor, and Devon Energy, are poised for potential buy points and could be actionable if the market rally continues.

Key Takeaways:

  • The Dow Jones, S&P 500, and Nasdaq composite indices advanced 2.8%, 3.1%, and 3.3%, respectively, in Tuesday's session.
  • The major indexes are still below their 50-day and 200-day moving averages, with the mid-August peaks serving as another key resistance area.
  • Megacaps Apple and Microsoft are doing well, but have a long way to go to recover from their declines.
  • Arista Networks stock retook its 200-day and 50-day lines, with a more decisive move above the 50-day line needed to break a short downtrend.
  • Enphase Energy stock retook its 50-day and 21-day lines, breaking a short downtrend at its highs.
  • Paylocity stock is right at a trendline entry, with a move above the Sept. 28 high of 253.26 as a possible trigger point.
  • On Semiconductor stock retaked its 50-day line, with a little more strength needed to clear a trendline within a new consolidation.
  • Devon Energy stock rallied from its 50-day line, working on a 75.37 buy point and a trendline within the base.
  • The stock market rally is gaining steam, with several leaders flashing buy signals, but investors must be prepared to jump out quickly if the rebound falters.
  • It's a time to work on watchlists and pay close attention to market direction and leading stocks and sectors.

Statistics:

  • Dow Jones: 2.8% gain in Tuesday's session, with a 10-day moving average at 34,459 and a 21-day moving average at 33,654.
  • S&P 500: 3.1% gain in Tuesday's session, with a 10-day moving average at 4,434 and a 21-day moving average at 4,313.
  • Nasdaq: 3.3% gain in Tuesday's session, with a 10-day moving average at 14,179 and a 21-day moving average at 13,828.
  • Apple stock: 2.6% gain in Tuesday's session, with a 10-day moving average at 156.21 and a 21-day moving average at 151.89.
  • Microsoft stock: 3.4% gain in Tuesday's session, with a 10-day moving average at 336.19 and a 21-day moving average at 324.21.

Sources:

  • Bloomberg
  • CNBC
  • Forbes
  • Investor's Business Daily
  • Yahoo Finance