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Dow Jones Plunges Nearly 800 Points As Stock Uptrend Threatened

The stock market plummeted Tuesday, quickly undoing the bullish work of the past week. The Dow Jones industrial average lost 799 points.




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The Dow’s loss of 3.1% sent the industrials back below the 50-day moving average, just one day after the index climbed back above that key line.

The Nasdaq composite was punished by a 3.8% plunge, while the S&P 500 tumbled 3.2%. Both fell back below their 200-day moving averages, and the Nasdaq now appears to have hit resistance at its 50-day line. For its part, the S&P 500 also turned back below its 50-day average, after all of one day above it.

Indexes have already wiped out all gains since Wednesday’s follow-through signal on the Nasdaq. A pattern of constructive price bars last week and Monday was rendered useless in Tuesday’s rout.

The market’s next move, whether a rebound or more selling, will need to wait two more days: Exchanges and financial markets will be closed Wednesday for the funeral of former President George H.W. Bush.

Volume fell on the Nasdaq and rose on the NYSE, according to unconfirmed data. Declining stocks led advancers by a 5-1 ratio on the NYSE and by about 6-to-1 on the Nasdaq.

Yield Curve Rattles Market

Transportation, financial, retail and industrial sectors were the weakest on the stock market today. A troubling development on the yield curve hit financials in particular. Part of the Treasury yield curve just inverted as the five-year yield fell below the two-year yield. That added to concerns of a slowing global economy.

All sectors were lower except the one that has served as a defensive moat since October — utility stocks. The SPDR Utilities ETF (XLU) rose a fraction.

The innovator IBD 50 ETF (FFTY) slid 3.5% as leading stocks offered no solace. Thirty of the 50 stocks fell more than 3.2%, the amount the S&P 500 lost Tuesday.

Dollar General (DG) fell nearly 7% to the lowest price since Oct. 11. The stock flashed a sell signal last month that was discussed in IBD 50 Stocks To Watch.

Veeva Systems (VEEV) triggered a sell rule Tuesday after shares fell more than 8% below the 98.38 buy point of a double-bottom buy point.

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