The stock market opened sharply lower Monday, but stock indexes significantly trimmed those losses in morning trade. The ISM manufacturing index unexpectedly rose from 58.7 to 60.2 in June; consensus estimates showed the index dropping to 58.5. Top stock Tesla (TSLA) raced higher after reporting bullish Model 3 production and is nearing a potential buy point. (For updates on this story and other market coverage, visit the Stock Market Today.)
Initially, the tech-heavy Nasdaq led the broad markets lower with a near-1% decline, but it pared its loss to 0.4% just after 10 a.m. ET. The S&P 500 and the Dow Jones industrial average fell 0.5% and 0.6%, respectively.
On the downside, energy component Chevron (CVX) fell about 1.5%. The stock is still etching a handle on its cup formation, showing a 131.18 buy point.
Tesla (TSLA) raced almost 5% higher early Monday after CEO Elon Musk said the company produced 5,000 Model 3 sedans last week, reaching its production goal. Shares are about 4% away from a 373.83 potential buy point.
Chinese leading stocks were once again under pressure Monday. Alibaba (BABA) fell over 2% and is back below its long-term 200-day moving average line. Last week, the stock triggered the 7%-8% loss-cutting sell rule from a 201.60 double-bottom entry after its breakout fizzled out.
Rival JD.com (JD) slipped 2%. The stock is seeking support at its 50-day line and is forming the right side of a potential base, but has a great deal of work ahead of it. Meanwhile, its relative strength line is lagging, showing significant market underperformance.
Among the FANG stocks, Netflix (NFLX) was the biggest loser with a 2% fall just after the market open, but the stock trimmed losses to just 0.5%. Two weeks ago, the stock reached the 20%-25% profit-taking level from a 338.92 flat-base entry, according to MarketSmith chart analysis. Shares have fallen six of the last eight trading sessions.
Meanwhile, Alphabet (GOOGL) fell 0.4% to trade near its 50-day line — a key support level. Shares are about 4% below an 1,161.20 handle entry in a double-bottom base.
Inside The IBD 50
Among the top growth stocks, oil and gas stock Viper Energy Partners (VNOM) moved up 2%, as it shapes the right side of a V-shaped potential base. However, the current structure is still too short to be a cup-shaped base — the minimum length is six weeks. The stock’s RS line has risen sharply over the last two weeks.
On the downside, Align Technology (ALGN) fell over 1%. The stock has fallen about 9% off its all-time high over the last two weeks and may be heading for a test of the 50-day moving average.