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Stock Market Holds Gains; Oil Sector Breaks Out To New Highs; Alphabet’s New Buy Point

Indexes held near session highs at midday Monday, as the stock market tried to build on a nascent rally. Oil stocks and Alphabet (GOOGL) were in focus.




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The S&P 500 and the Nasdaq composite rose 0.5%, putting Monday’s stock market on track for the fourth gain in five days. Volume was lower on the NYSE and Nasdaq compared with the same time on Friday.

The energy sector climbed the most after the price of U.S. crude topped $80 a barrel for the first time in seven years. Oil futures were up more than 2% midday Monday to $81.09 a barrel. Global oil supplies are tight as the global economy rebounds, forcing prices higher.

Energy Select Sector SPDR (XLE) rose 1.4% at midday and broke out of a cup base with a 56.75 buy point.

U.S. Stock Market Today Overview

Index Symbol Price Gain/Loss % Change
Dow Jones (0DJIA) 34934.78 +188.53 +0.54
S&P 500 (0S&P5) 4411.84 +20.50 +0.47
Nasdaq (0NDQC ) 14652.65 +73.11 +0.50
Russell 2000 (IWM) 223.39 +1.81 +0.82
IBD 50 (FFTY) 47.18 +0.48 +1.03
Last Update: 11:50 AM ET 10/11/2021

The energy sector has produced a number of breakouts, making it one of the few areas where investors have found some opportunities.

Oil Stock Breakouts In Stock Market

Williams Cos. (WMB) broke out of a cup base with a 28.45 buy point. The pipeline operator was discussed in Income Investor last week.

Hess (HES) topped the 91.19 buy point of a cup base.

Callon Petroleum (CPE) and EOG Resources (EOG) are near a buy point. Denbury (DEN) is forming a base with an 81.47 buy point.

But for many other industries, high oil prices act as a headwind. It also hurts consumers, who account for roughly two-thirds of the U.S. economy. Consumer stocks, however, were higher Monday. Consumer Discretionary Select Sector SPDR (XLY) and Consumer Staples SPDR (XLP) rose 0.6% and 0.3%, respectively.

Airline Stocks Drag Stock Market

Airline stocks fell after the new spike in oil prices. Southwest Airlines (LUV) gapped down more than 2% after the discount airline canceled more than 2,000 flights over the weekend, and disruptions continued into today.

Southwest blamed weather and staffing issues in Florida. Some reports suggested pilots and other staff staged a sickout to protest a vaccine mandate, but Southwest’s pilots union denied such a move. The stock remains in a correction, 19% from a new high.

The Dow Jones Industrial Average was erratic in the first half hour of trading and was up 0.5%.

Dow component Merck (MRK) reversed lower 1% after the pharmaceutical company and partner Ridgeback Biotherapeutics said Monday they filed an application with the Food & Drug Administration for approval of their Covid-19 pill. A late-stage trial showed that the antiviral cut the risk of hospitalization or death by about half in high-risk Covid patients.

The Russell 2000 rose 0.8%. The midcap S&P 400 climbing 0.8% also.

IBD 50 Higher As Oil Stocks Rally

Innovator IBD 50 ETF (FFTY) gained 0.7%. Oil stocks Callon, Diamondback Energy (FANG) and ChampionX (CHX) rose more than 2%.

CarGurus (CARG), which topped a 33.45 buy point on Thursday, was down 2.6% but still above that entry. Asbury Automotive Group (ABG), which is not in the IBD 50, is trying to clear a 211.56 buy point but volume is light.

The auto-shopping website broke out after auto dealer stocks made breakouts, but some of those (AutoNation (AN) and Penske Automotive Group (PAG) for example) have receded.

Google and YouTube parent Alphabet (GOOGL) is now forming a flat base with a 2,925.18 buy point. That makes is a leader to watch. The new base is third stage, which means investors should expect less from the next breakout.

IBD’s market outlook considers the stock market to be in a correction, so investors should be avoiding stock purchases. It’s a time to be light with stock exposure until bullish signals can be seen.

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

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