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Dow Jones Wipes Out 400-Point Gain As Stock Advance Keeps Thinning

The major indexes cut their gains by more than half in late trading as the Dow Jones industrial average tried to hold a tiny gain, while Amazon.com (AMZN) was on track for a sell signal.




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The Dow early today went up more than 400 points, up 1.7%, but that’s as high as the industrials got. The Dow and other indexes reduced gains starting at the open. The Dow was back below its 200-day moving average, up 0.1% in late afternoon trading.

The S&P 500 and Nasdaq composite moved slightly above their own 200-day lines and started receding. The S&P 500 was up 0.3% and the Nasdaq up 1.2% thanks to rebounding technology shares.

Small caps hardly participated in today’s bounce, with the Russell 2000 reversing lower to a loss of 0.7%. The small-cap benchmark has been struggling since September and went below the 50-day average much sooner than the other indexes.

Volume was tracking lower compared with the same time Thursday. Breadth was mixed, with winners over losers on the Nasdaq by 11 to 10 but decliners leading 9-7 on the NYSE.

Software, Retail Lead

Software and retail industry groups crowded the top of today’s industry performance table.

Online retail leader Amazon.com bounced 2.5% — a small part of the week’s losses. The stock plunged more than 6% this week and is on track to close the week below the 10-week moving average. Weekly volume is more than double its average, which triggers a sell signal for Amazon.com.

Volume in the sell-off Wednesday and Thursday was the highest since the April 27 breakout that ignited its most recent run-up. Amazon.com is still in IBD Leaderboard as the stock’s rebound is monitored.

Leading stocks were mainly higher, although they also pared gains. The Innovator IBD 50 ETF (FFTY) bounced 1.7%. Eleven of the 50 stocks climbed more than 3%, although most still have a lot of repair work to do. The best advancers were technology companies.

Defensive companies Encompass Health (EHC), a home health care provider; and real estate investment trusts CareTrustREIT (CTRE) and Sabra Healthcare (SBRA) were some of the worst performing.

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