The Dow Jones Industrial Average moved higher as Americans voted on Election Day. A number of so-called “Republican stocks” made gains, though the Donald Trump SPAC Digital World Acquisition (DWAC) fell. Coinbase (COIN) and Riot Blockchain (RIOT) plunged while Bitcoin undercut June’s bear-market low after Binance moved to buy the FTX crypto exchange.
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A number of stocks tested buy points amid the broadly bullish action, including Albemarle (ALB), BJ’s Wholesale Club (BJ) and Fabrinet (FN).
Volume was up on both the Nasdaq and the New York Stock Exchange vs. the same time on Monday. This is a positive on an up day.
The yield on the benchmark 10-year Treasury note fell 9 basis points to 4.13%. West Texas Intermediate crude oil slipped more than 2%, slicing though $90 per barrel.
Nasdaq Pops, IBD 50 Lags
The Nasdaq was off highs but fought off negative pressure to gain 0.2. The S&P 500 was up 0.4%.
The S&P 500 sectors were mostly positive, with materials and real estate faring best. Consumer discretionary and communications services lagged most.
Small caps reversed lower, with the Russell 2000 down 0.5%.
But the Innovator IBD 50 ETF (FFTY), a bellwether for growth stocks, fared worst as it fell 0.6%.
Dow Jones Pops: Amgen Shines, Disney Earnings Due
The Dow Jones Industrial Average was faring best out of the major averages as it rose nearly 1%. But it also gave up some gains.
Amgen (AMGN) led the index, gaining around 5%. Boeing (BA) also shined, as it rose around 2%.
Walgreen Boots Alliance (WBA) lagged, dipping 1.4%. But Walt Disney (DIS) fared worst ahead of its earnings report as it fell 1.5%
‘Republican Stocks’ Gain
Research shows the stock market tends to rally after the midterm election. Since 1950, the average one-year return on the S&P 500 following a midterm was about 15%.
With Republicans expected to take at least partial control of Congress, a number of stocks hand-picked by Strategas for its GOP portfolio were gaining.
Defense play Lockheed Martin (LMT) rose nearly 1% and is currently trading in a buy zone above a 480.09 entry, according to MarketSmith analysis.
Johnson & Johnson (JNJ) reversed higher to gain nearly 1%. It is nearing a cup-with-handle entry of 175.49.
Leaderboard stock Cheniere Energy (LNG) is also on the list and rose nearly 2% for the day. The natural gas play is trading just below a 178.72 buy point.
Donald Trump Stock Slides
Digital World Acquisition failed to rally with other Republican stocks. The Donald Trump SPAC surged Monday on election speculation.
The future of the firm, which is trying to take the former president’s Trump Media and Technology Group public, remains up in the air. A shareholder ballot on whether to approve a deadline extension to complete the merger has been pushed out until Nov. 22.
After initially failing to hold the vote in September, the SPAC’s sponsor, ARC Global Investments, contributed about $2.9 million to extend the merger deadline until Dec. 8, according to federal filings.
Trump Media and Technology Group’s main product at the moment is conservative social media site Truth Social, a right-leaning alternative to Twitter.
DWAC stock was off lows for the day but remained down more than 6%. It is around 64% higher so far this month but has lost nearly 48% for the year. The Donald Trump stock is in the bottom 19% of stocks in terms of stock market performance over the past 12 months.
Coinbase Stock, Bitcoin Rally After Move
COIN stock and Bitcoin rallied explosively before giving up their gains and more.
They fought their way off lows after it emerged that Binance has reached a deal to buy the FTX crypto exchange.
In a tweet, Binance CEO Changpeng Zhao said they were coming to the aid of the company.
“This afternoon, FTX asked for our help. There is a significant liquidity crunch,” he said. “To protect users, we signed a nonbinding LOI, intending to fully acquire FTX.com and help cover the liquidity crunch.”
It is a remarkable reversal of fortune for FTX, which is led by CEO Sam Bankman-Fried. Earlier in 2022, it was valued at $32 billion by private investors.
Binance is the world’s largest crypto exchange by 24-hour trading volume.
After briefly turning positive, COIN stock reversed hard and is down nearly 13% on the day. It continues to trade below all major moving averages. Shares are down over 80% since the start of the year.
Bitcoin also saw losses intensify after briefly lifting off its lows for the day. It was trading just above the $18,000 mark after falling more than 11%. It is at lows for the year.
Other cryptocurrency plays struggled. The Grayscale Bitcoin Trust (GBTC) plunged almost 13% while Bitcoin mining play Riot Blockchain fell more than 10%, though it was off lows for the day.
ZeroHedge said in a tweet that the FTX liquidation was hitting stocks, knocking them off highs.
Outside Dow Jones: 3 Stocks Test Entries
Albemarle briefly passed a consolidation buy point of 308.34 before reversing. It also cleared an early entry of 287.98, just above the Nov. 1 high.
Overall performance is strong, with the stock holding a perfect IBD Composite Rating of 99.
Charlotte, N.C.-based Albemarle is the world’s largest lithium producer and one of the biggest providers of lithium for electric batteries. The company already supplies the crucial metal to EV giant Tesla (TSLA).
BJ’s Wholesale Club tested a cup-with-handle entry of 78.93. The relative strength line just hit a new high, a bullish sign.
Earnings are a key strength for the retail stock. Big money has been buying shares of late, with its Accumulation-Distribution Rating coming in at B+.
Fabrinet sits in a buy zone after clearing a cup-with-handle buy point of 118.15. It was popping on strong earnings.
With the current stock market uptrend still under pressure, buying stocks now carries extra risk.
Please follow Michael Larkin on Twitter at @IBD_MLarkin for more analysis of growth stocks.
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