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Investors Business Daily placed the Market in Correction on 9-30-2021

Below is the full article for IBD:

KEN SHREVE 05:43 PM ET 10/01/2021

A rough week for the stock market ended with solid gains Friday after a spate of distribution days and bearish action knocked the stock market into a correction. Volume fell sharply from Thursday's levels.

Sentiment was positive after money flowed into bonds, sending the 10-year Treasury yield lower by 6 basis points to 1.47%.

Small caps led the way, with the Russell 2000 up 1.7%. For the week, the Russell lost just 0.3%. The Dow Jones industrials jumped 1.4% Friday, the S&P 500 rallied 1.1% and the Nasdaq gained 0.8%.

Stock Market Today

Breadth was positive on the Nasdaq, with advancing stocks beating decliners by less than 2-to-1. On the NYSE, winners beat losers by nearly 4-to-1.

Merck (MRK) boosted the Dow Jones industrials after the company reported positive data for a Covid pill. A late-stage trial showed the oral antiviral treatment reduced the risk of hospitalization or death by around 50% in Covid patients. Merck, which jumped more than 8%, is developing the drug with privately held Ridgeback Biotherapeutics.

High-profile Covid-19 vaccine makers like BioNTech (BNTX) and Moderna (MRNA) plunged on the news, along with Maravai LifeSciences (MRVI), which slumped nearly 12%.

Travel-related stocks had a good day on the Merck news. Leaderboard stock Airbnb (ABNB) popped 3.1%, halting a four-session slide. IBD's airline group rallied around 5%.

Oil and gas-related groups were also among the day's best performers. The Energy Select Sector SPDR ETF (XLE) jumped 3.4%. Materials and financial stocks also did well.

In general, leading growth stocks had a terrible week, with the Innovator IBD 50 ETF (FFTY) down 8.7% for the week. But the fund pared a 3.9% loss Friday to less than 1%, with 20 components up 2% or more. The ETF found support at its 200-day moving average.

What To Do Now

IBD put its market outlook at correction after another weak close Thursday that saw the Nasdaq composite suffer its fourth straight distribution day. The warning signs had been out there for a while, including a rising distribution-day count. But one day of market strength does not a new uptrend make. The stock market still needs to prove itself more.

With the stock market in a correction, avoid the temptation of buying stocks in a down-trending market. There will always be stocks showing strength, but a weak market can eventually bring everything down with it. If market conditions continue to improve amid renewed signs of institutional buying, new setups should emerge. A confirmation of strength could come as early as next week.

Pay attention to stocks that have held up well during the selling like (BILL). The company priced a share offering on Sept. 22 at 272 and the stock continues to trade well. In a healthy market, the stock would be buyable after a solid test of its 10-week moving average. Among recent IPOs, Global-e Online (GLBE) is consolidating near its 10-week moving average and still has the look of an emerging leader.

Two fertilizer stocks led the MarketSmith Growth 250. CF Industries (CF) jumped out of a lopsided cup base in heavy volume and scored an all-time high. Group peer Mosaic (MOS) rallied nearly 6%. It's near the top of a cup base, although an early entry was seen when the stock broke out over a trend line on Sept. 23.

Investors business Daily

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