Dow Jones Leads, Small Caps Bludgeoned; Upstart Bucks Decline As These Growth Stocks Build Bases

The Dow Jones Industrial Average battled back above the break-even level during afternoon action in the stock market today, rising nearly 0.1% as at least eight of its 30 components rallied 1 point or more. The S&P 500 is trying to edge back into positive territory while the Nasdaq composite trimmed losses. But small caps, or generally companies valued at $2 billion or lower, still underperformed as small banks sold off.

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Please see this recent Investor’s Corner article on how to analyze the Russell 2000.

The yield on the benchmark U.S. Treasury 10-year bond lifted higher for a second straight day, hitting 1.72%, according to data from the Cboe.

Solar, gaming, advertising, oil equipment, department store, long-term care, enterprise software and semiconductor equipment stocks led the downside. These groups all fell well more than 2%. But utility, soap, diversified operations, insurance broker and aerospace firms rose, helping buffer the overall slide.

The S&P 500, down as much as 0.8%, narrowed that deficit to less than 0.1%.

Beyond Dow Jones: Will Banks Rule In The Second Quarter Too?

Headed into Monday’s action, the Bank sector ranked No. 4 among 33 sectors tracked for blended multi-month relative price performance within IBD’s stock research tables.

The Bank sector is up 32% year to date; S&Ls (savings and loans) has moved up to No. 6 and is up 18.5% since Jan. 1 before Monday’s decline in lending issues.

The Nasdaq, seeing some positive reversals by a number of FAANG stocks, virtually wiped away an early 1.3% decline to fall less than 0.3%. At around 2 p.m. ET, the loss remained moderate at 0.6%.

But iShares Russell 2000 (IWM) still nursed a loss of around 2.5%. The ETF is having some trouble since last week in rebounding back above the 50-day moving average, a key medium-term support and resistance level.

Volume is running slightly higher vs. the same time Friday on the Nasdaq and mildly lower on the NYSE.

In MarketSmith Growth 250: Upstart

Upstart (UPST), the AI-driven consumer lending platform started by a team of ex-Google engineers and executives, marked a third straight advance early on. Its gain at one point exceeded 9%. But shares turned tail for a 4% loss.

Upstart still holds a mighty 585% gain from its initial public offering at $20 a share.

With less than two hours to go in the regular session, Upstart’s trading volume is running 17% above its 50-day average.

However, the stock is not at a proper buy point now.

The stock formed a narrow, deep cup pattern with a 105.68 entry on March 18 after the San Mateo, Calif., firm reported a 39% jump in fourth-quarter revenue to $86.7 million and a new strategic acquisition. Earnings came in at a penny a share vs. 8 cents a year earlier.

According to IBD Stock Checkup, Upstart heralds a 94 Composite Rating on a scale of 1 (slimy) to 99 (scintillating).

The IBD Composite Rating quantifies key fundamental, technical and fund sponsorship metrics into a single easy-to-use score. However, this rating serves best as a tool to prune your watchlist of top growth stocks — not for timing your buys or your sells.

Analysts surveyed by FactSet see earnings bolting 487% higher this year to 47 cents a share and rising another 77% in 2022. Upstart’s consumer loans industry group ranks No. 30 among 197 industry groups for six-month price-weighted performance.

The stock briefly held a position in IBD Leaderboard.

Stock Market Movers

Meanwhile, Riot Blockchain (RIOT), Chinese online brokerage Futu (FUTU), Aviat Networks (AVNW) and U.S. Steel (X) have shown serious outperformance in the past six months or more. All four recently showed up on MarketSmith’s Power From Pivot screen.

Riot, an investor in the blockchain and Bitcoin ecosystem, recently showed bullish support at the 50-day moving average. Shares are forming a deep base.

Bitcoin traded at $57,884, up 4% over the past 24 hours, Coindesk.com data showed.

Futu, a huge winner after clearing a six-week cup at 51.20 in January, is also in correction mode. But shares surged 13% and are aiming to reclaim the 50-day line.

Aviat and U.S. Steel are attempting breakouts. Aviat’s latest cup without handle of five weeks fell one short of the six-week minimum. Yet shares remain up sharply since clearing an eight-week cup with handle and a 39.60 buy point during the week ended Feb. 5.

U.S. Steel tried to clear a cup-with-handle base with a 24.56 buy point, but the stock backed off highs. U.S. Steel got some airtime in Monday’s IBD Live show.

Also, Sleep Number (SNBR) is showing impressive strength after a strong breakout past a 54.93 buy point back in October. The stock has made just two real pullbacks to the 10-week line.

More sideways action could lead to a new base.

Please follow Chung on Twitter: @saitochung and @IBD_DChung

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