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Dow Jones Fights To Hold This Key Support Level; Will Bitcoin Keep Rebounding?

U.S. stocks sold off Monday on the first trading day of the second quarter as China fired a new salvo in the emerging conflict on bilateral trade between the world's two largest economies. The Dow Jones industrials closed the day off 1.9%. The blue-chip index clipped its 200-day moving average for the first time since late June of 2016.

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Meanwhile, traders sought to bargain hunt in digital currencies and related securities as Bitcoin rallied 2.5% to $6,948, according to data from Coindesk.com. Bitcoin Investment Trust (GBTC) stopped a six-day selling streak, rising more than 6% to 11.15. Volume was thin, though, and the popular closed-end fund still lies below its long-term 200-day moving average.

At 71% below a 52-week and all-time peak of 38.75, Bitcoin Investment Trust is still deep in a correction. The fourth-quarter climax run indicates that Bitcoin will need a lot of time before strong buying stabilizes prices and the balance of supply vs. demand tips to the latter.

The Dow saw at least half of its 30 components lose 2 points or more. At the session's low of 23,344, the 30-stock Dow Jones industrial average fell 12% below its all-time peak of 26,616. That's a big enough decline to call it an intermediate-level correction.

In a healthy stock market, the major indexes trade above both the 50- and 200-day moving averages.

The S&P 500 dropped 2.2% as all but two of IBD's 197 industry groups fell for the day. The Nasdaq composite, hurt by big sell-offs in all of the FAANG stocks, slumped more than 2.7%. At one point, the leading U.S. equities index fell to as low as 6805 but maintained a small air pocket above its 200-day line.

Retail internet, auto retailing, automaker, biotech, airline, movie and U.S. oil and gas exploration stocks sold off the hardest, each down more than 3%. WTI crude oil futures sank 2.8% to $63.13 a barrel.

NVR (NVR), the luxury homebuilder, helped push the residential construction industry group to a small gain but most top-rated members in the group fell. NVR rose 4% to 2,922 but has been spending considerable time beneath the 50-day moving average.

Industry group mate LGI Homes (LGIH) sank more than 5% to 66.59 in volume that was only slightly above average. The IBD 50 member has been crafting the right side of a new cuplike pattern. Watch to see if the small-cap stock can stay on the north side of its 50-day moving average.

The S&P SmallCap 600 fell more than 2.5% but has yet to challenge its 200-day moving average, which continues to rise.

LGI sports the best Composite Rating of 95 (on a scale of 1 to 99) within IBD's Building-Residential/Commercial industry group, as seen in IBD Stock Checkup. The Texas-based  homebuilder, which saw a 62% rise in home closings to 1,844 in the fourth quarter, also saw a 5.6% increase in average home sales price vs. a year ago.

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