IBD Live: A New Follow-Through Signal; Should You Start Buying Again?

TL;DR

Despite the signing of a two trillion dollar stimulus deal, volatility continues to dominate Wall Street. The market experienced a follow-through day, but caution is advised as the possibility of a global recession and increasing reinfection rates loom.

Transcript

[Applause] hey it's your IBD live tweeter and chief Rachel Fox here wrapping up another week of trading with IBD live after President Trump signed a two trillion dollar fiscal stimulus deal as Friday the major US stock indexes posted strong gains at the start of the week however volatility still rules Wall Street the Nasdaq briefly reclaimed its 21... Read More

Key Insights

• 🤝 Despite the stimulus deal, market volatility continues to dominate Wall Street.
• 🦔 The global recession threat remains, with countries teetering on the edge.
• 🥳 Investors should proceed with caution even if a follow-through day occurs.
• 🫥 IBD's top watch list focuses on coronavirus stocks with strong relative strength lines during corrections.
• 🥺 Stocks like Netflix, Amazon, Nvidia, and Vertex are likely to lead the market in the next major uptrend.
• 👨‍💼 Continued growth is expected for quarantine-friendly businesses even after the pandemic.
• 🥳 The follow-through day on Thursday lacked the necessary strength, indicating the need for caution.

Questions & Answers

Q: What is a follow-through day, and why is it important?

A follow-through day signals the start of a potential market uptrend after a stock market crash. It indicates that the market is rebounding. However, IBD's research shows that the first follow-through day after a vertical violation is more likely to fail.

Q: Why should investors be cautious even if a follow-through day occurs?

Despite a follow-through day, there are reasons for caution. If reinfection rates rise in other countries, the market could experience another downturn. Additionally, Thursday's follow-through day didn't demonstrate the required level of strength, as major indexes ended the week with losses.

Q: What is IBD's top watch list of coronavirus stocks, and why are these stocks highlighted?

IBD's top watch list focuses on stocks that outperform the market during the coronavirus crisis. Companies like Netflix, Amazon, Nvidia, and Vertex have shown strong relative strength lines during corrections. These stocks also have quarantine-friendly business models that are likely to continue growing even after the pandemic ends.

Q: When is the next episode of IBD live, and what can viewers expect?

The next episode of IBD live airs on Monday at 9:20 a.m. Eastern. Viewers can expect in-depth market analysis, portfolio strategies, and insights into stocks to watch. Tune in for the first hour of trading to stay updated.

Summary & Key Takeaways

• President Trump's signing of a two trillion dollar fiscal stimulus deal resulted in strong gains in the major US stock indexes at the beginning of the week.

• The Nasdaq briefly reclaimed its 21-day exponential moving average before reversing lower for the day. This action followed an almost follow-through day, but with lower volume, IBD did not consider it an official follow-through.

• While China is performing comparatively better, countries still face the risk of a global recession, especially if reinfection rates increase. Investors are advised to proceed with caution, even if a follow-through day occurs.