Stocks today proved largely directionless, with a notable decline in both small caps and the transportation sector serving as exceptions. Gold futures rallied sharply. Meanwhile, Bitcoin and cryptocurrency trading platform Coinbase Global surged 7.1% in double normal volume and continued to show emerging leadership in the stock market today.
Gold rallied 1.5% to $2,063 an ounce on the Comex exchange. That marked the highest close since Aug. 6, 2020.
Silver futures joined the rally in precious and industrial metals. Silver gained 1.5%, ahead of a 1.2% rise by copper. Crude oil also had a good session, rebounding 2.1%. Watch for news coming out of an upcoming OPEC+ meeting due on Thursday. SPDR Gold Shares is up 2% for the week and headed for a potential third week in a row of gains.
Meanwhile, Coinbase Global, which rallied more than 16% last week and peeked slightly above a 114.43 buy point in a four-month cup without handle, has boomed well past the 5% buy zone from this breakout point.
Stocks Today
That 5% buy zone for COIN goes up to 120.15. Therefore, watch for a potential light-volume pullback that sends shares back into a more strategic area in which to buy.
Bitcoin surged on Tuesday amid continued dollar weakness. The dollar fell to 147 Japanese yen. The popular cryptocurrency traded at $38,124, up more than 130% over the past 12 months.
The relatively tame action in stocks today actually may be a good thing. Major indexes have gone on a torrid run over the past four weeks since a follow-through day occurred on Nov. 1. (Please read this Investor's Corner on why the follow-through day still helps give individual investors a competitive edge in stocks today.)
Amid a $39 billion auction of fresh U.S. Treasury seven-year bonds, the yield on the key 10-year note fell 5 basis points to 4.33%, down sharply from last month's peak of 4.99%.
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Nasdaq Outperforms
While the Dow Jones Industrial Average edged up 0.2% in stocks today, the S&P 500 closed up 0.1%. The Nasdaq 100 and the Nasdaq composite both added nearly 0.3%. The Russell 2000 fell nearly 0.5%.
Volume rose mildly vs. the same time on Monday, early data showed. Meanwhile, breadth in stocks today was also mixed. On the Nasdaq, declining issues exceeded risers by less than 150 issues, according to data on Thinkorswim. On the NYSE, gainers beat losers by only 57 stocks.
Elsewhere, the Dow Jones transportation average slipped 0.6%. At 14,816, the index trades 11.4% below its year-to-date peak of 16,717.
Trucking companies were among the day's worst performing industry groups, down 2.4% on a price-weighted basis and third worst among 197 industry groups tracked by IBD.
Tool, wood products, integrated computer systems, specialty steel and coal stocks also fell 1% or more. But tire, gold and silver mining, automaker, database software, specialty retail and alternative energy firms rose more than 1% each, offsetting those losses.
Budding Gold Play
Going back to stocks today, Wheaton Precious Metals may justify a spot on an investor's watchlist.
The Vancouver-based buyer of purchase agreements for both gold and silver from operating mining companies is quickly building the right side of a long cup-shaped base. For now, a potential entry point resides at 52.76, simply the cup's left-side peak.
The stock has gotten some airplay on IBD Live recently.
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Beyond Stocks Today: High-Yield Bond Outlook
Meanwhile, portfolio managers at bond fund management giant Payden & Rygel expressed optimism for high-yield corporate debt in 2024.
Jordan Lopez, a director and head of high yield strategy at Los Angeles-based Payden & Rygel, noted during a conference call with journalists on Tuesday that one of the biggest factors for a much better performance by this asset class this year vs. 2022 was simply the resilience of corporate earnings. He noted at the end of the day, the direction of corporate earnings is going to drive default rates on these riskier bonds, and ultimately determine the spread in yields between such bonds and U.S. government bonds.
As for 2024, the outlook is "pretty positive," Lopez said. Overall leverage among target companies "remains relatively low" and that corporate managers "have done a very good job" of managing their firms' balance sheets. He also expressed less concern about the so-called "duration runway" risk, referring to coming years in which companies must pay back the principal of matured bonds and issue new debt at higher interest rates.
Lopez also said that with high-yield debt currently delivering returns in the mid-8% level, despite their historical nickname as junk bonds, they have become competitive with the expected long-term gains for common stocks.
The iShares iBoxx High Yield Corporate Bond ETF rose 0.4% on Tuesday and is up 2.3% for the fourth quarter so far. That still trails a 6.2% lift by the S&P 500 over the same time frame. The exchange traded fund holds an annualized dividend yield of 5.9%, according to its weekly chart on MarketSmith.
Please follow Chung on Twitter: @saitochung and @IBD_DChung
