Tuesday, February 25, 2020

Stock Rout Intensifies As These Stocks Flash Sell Signals
04:15 PM ET 02/25/2020

The stock market sold off for a second straight day, with major indexes losing around 3% each. Some top-rated stocks made sell signals.

Sellers piled on, leaving the Nasdaq composite with a 2.8% hole. The composite is testing the 9,000 level. The S&P 500 plunged 3%. Small caps did even worse in today's trading, with the Russell 2000 finishing 3.5% lower. It is now down nearly 6% for the year.

The Dow Jones Industrial Average plummeted 3.1%. Boeing (BA) cost the Dow a big chunk after sliding 4.4% on more bad news for its 737 Max jet. The Federal Aviation Administration urged airlines to check Boeing 737 Max engine linings to prevent the potential for a failure of both engines. Earlier, Boeing won its first order of the year, for 15 787 Dreamliners from ANA.

Volume again grew on the Nasdaq and NYSE, the fourth straight day of declines in higher volume. That's a clear sign that institutional investors are liquidating shares. Declining stocks led advancers by a bearish 9-1 ratio on the NYSE and by nearly 6-to-1 on the Nasdaq.

Payment stocks, which had been market leaders this year, fell sharply after Mastercard (MA) warned it will miss current-quarter sales targets because of the spreading coronavirus outbreak. Mastercard, a Leaderboard stock, said the disease is hurting international travel and, to a lesser extent, international e-commerce. Its shares fell below the 50-day average.

ETFMG Prime Mobile Payments (IPAY), an ETF that tracks e-payment stocks, fell about 4% and closed below its 50-day line.

Wex (WEX), a payments processor largely to commercial and government agencies, slid below its 50-day moving average and touched its 200-day line in heavy volume. Square (SQ) lost more than 2%.

The Innovator IBD 50 ETF (FFTY) sold off 3%. Sell signals are piling up among growth stocks.

FTI Consulting (FCN) plummeted below its 50-day moving average in heavy volume. The break of support and the fact that FTI erased all gains from its 114.47 buy point amount to sell signals. The consulting firm missed fourth-quarter profit expectations.

Construction companies that reported results were mainly lower.

LGI Homes (LGIH) plummeted 14% after the company beat profit estimates and forecast full-year home closings of 8,400-9,400, up from 7,690 last year. TopBuild (BLD) slid below its 50-day moving average after it topped profit views but missed sales expectations. It pared losses to close above the support line.

Benchmark Treasury yields sank to record lows as investors fled for havens. The 10-year yield touched a new all-time low of 1.31%, according to Tradeweb. The previous record low was 1.325%, set on July 6, 2016. The 30-year Treasury yield dropped as low as 1.788%, eclipsing a prior record of 1.811%, set just yesterday.

The price of crude oil, also reflecting worries about the global economy, closed below $50 a barrel. Gold prices and mining stocks, which had been rising on haven demand, were lower Tuesday.

Juan Carlos Arancibia is the Markets Editor of IBD and oversees our market coverage. Follow him at @IBD_jarancibia

No comments: