Dow Jones Leads Broad Rally; This Warren Buffett Stock Fights To Retake Buy Point

The Dow Jones Industrial Average led a broad stock market rally Friday. Cisco Systems (CSCO) and Boeing (BA) were the best blue chip performers. Warren Buffett stock RH (RH) tried to retake its buy point, while two other stocks broke out. Finally, lockdown stocks endured another tough session, with names including Zoom Video Communications (ZM) and Netflix (NFLX) losing ground.

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Nasdaq Lags, S&P500 Gains

The tech-heavy Nasdaq ended up as the final session of the week’s worst performer. However it still managed to turn in a gain of around 1%. This moved it further clear of its 50-day moving average. The top performer was once more China e-commerce stock Pinduoduo (PDD), which rose sharply for a second day in succession on strong earnings.

It failed to keep pace with the broader-based S&P 500 however, as it turned in a gain of around 1.4%. Top performers included casino stock MGM Resorts International (MGM), which rose 9.3%, and energy stock Phillips 66 (PSX), which gained almost 7.1%.

Volume was down slightly vs. Thursday, according to early data. It slipped around 15% on the NYSE and fell about 5% on the Nasdaq. CAN SLIM investors prefer volume to be higher on an up day.

Small caps roared back after two straight days of declines. The Russell 2000 index climbed 2%, closing near session highs.

Sectors performed strongly, with all closing positive. Energy, real estate and utilities were the best performers. The Vanguard Energy Index Fund ETF (VDE) was up around 4%.

The Innovator IBD 50 ETF (FFTY) also managed to close in the green, rising around 0.7%. Top performers on the IBD 50 included Futu (FUTU), which turned in another strong gain of 5.7%, and wood-alternative decking maker Trex (TREX), which rose 4.7%.

Boeing Climb Lifts Dow Jones

The Dow Jones Industrial Average closed higher, snapping a two-day losing streak. It turned in a gain of around 1.4%, and was the best performing major index of the day.

It was bolstered by the solid performance of aerospace giant Boeing (BA), which gained 5.9%. Earlier this week it got a boost on the news the Boeing 737 Max will reportedly get regulatory approval as early as next week to return to service after being grounded for around 20-months. This allowed the stock to climb back above its 200-day moving average for the first time in months.

But Cisco Systems (CSCO) was the best performing component after turning in a gain of 7.1%. It closed in on its own 200-day line after reporting better than expected earnings.

Warren Buffett Stock Fights For Buy Point

Warren Buffett stock RH rallied 3.6% and is trying to regain its buy point after Thursday’s breakout. The home goods retailer of hardware, bathware, furniture and lighting products is just below a consolidation pattern buy point of 410.59.

The stock continued to show muscle, with its relative strength line sitting at fresh highs. RH stock has a top-notch Composite Rating of 96. The Stock Checkup shows it boasts a strong mix of earnings and stock market performance.

Warren Buffett’s Berkshire Hathaway (BRKB) took an initial position of 1.2 million shares in RH in Q3 last year and grew the position by 41% to 1.7 million shares in Q4. RH stock made strong gains on both reports. Berkshire still holds its stake, which works out at around 8.8% of the company’s stock.

Meanwhile Chinese brokerage stock Futu (FUTU) broke out from a cup base with a 41.09 buy point. Its breakout came as its RS line hit a fresh high, which is a bullish indicator.

The stock, which started trading in March 2019, has a perfect IBD Composite Rating of 99. The stock was featured in Friday’s IPO Stocks To Watch column.

Cloud enterprise software stock Datto (MSP) also staged a breakout from an IPO base Friday, according to MarketSmith. The stock has a strong Composite Rating of 83, but this is an imperfect guide given it started trading on Oct. 23.

Lockdown Stocks Struggle

It was a tough day for lockdown stocks, as they ended the weak on a sour note with broad losses.

Zoom Video Communications’ two-day win streak came to an end as it lost 5.9%, while Teladoc Health (TDOC) slipped 2.1%. At-home fitness stock Peloton Interactive (PTON) also ran out of puff after a recent rally, skidding 7.3% and falling back below its 50-day line.

Streaming giant Netflix also fell, surrendering 0.8%, while Etsy (ETSY) gave up 1.7%.

However e-commerce leader Amazon.com (AMZN) managed to buck the trend, eking out a 0.6% rise after spending much of the session in the red.

Please follow Michael Larkin on Twitter at @IBD_MLarkin for more on growth stocks and stock market analysis.

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