Dow Jones futures and S&P 500 futures fell modestly early Thursday, while Nasdaq futures came under pressure. The stock market rally quickly shook off a shakeout Wednesday, closing near session highs, helped by coronavirus vaccine news. But risks of a market pullback continue to grow.
Microsoft (MSFT), Facebook (FB), Google parent Alphabet (GOOGL), Nvidia (NVDA) and chip-equipment makers fared well, even as Apple stock, Tesla (TSLA) and some white-hot software makers retreated.
Tesla stock fell solidly early Thursday, weighing on tech futures. Apple also lost ground.
Earnings Amid Stock Market Futures
Meanwhile, new IPO Rocket Companies (RKT), CrowdStrike (CRWD), MongoDB (MDB) and Five Below (FIVE) reported quarterly earnings late Wednesday. Costco Wholesale (COST) reported August sales.
CrowdStrike stock fell sharply overnight despite a beat-and-raise report. MongoDB also beat earnings views. MongoDB stock rose modestly after closing below the official buy point but above an early entry.
However, Rocket stock tumbled overnight despite delivering booming earnings growth, though the Quicken Loans parent sees slightly slower loan growth in the current Q3.
Rocket Companies and 2019 cybersecurity IPO CrowdStrike had surged in recent sessions. CRWD stock had reversed lower Wednesday, but has had big gains, boosted by results from Salesforce.com (CRM) last week and Zoom Video (ZM) on Tuesday.
On the upside, Five Below stock jumped overnight on strong earnings and sales. Shares of the teen-focused discounter cleared a buy point Wednesday.
Costco stock climbed modestly overnight after rising to a fresh high Wednesday. August sales rose 15% to $13.56 billion, at least the third straight month of accelerating growth.
The stock market rally opened sharply higher Wednesday, but the Nasdaq reversed lower as it flashed new signs of being extended. But instead of starting a pullback, the tech-heavy index reversed higher, while the Dow Jones and S&P 500 index outperformed. The CDC is alerting states to be ready for a coronavirus vaccine
in early November.
Microsoft, Apple (AAPL), Nvidia and Tesla stock are all on IBD Leaderboard. Costco and Facebook stock are on SwingTrader. Microsoft stock is on the IBD Long-Term Leaders list. MSFT and Nvidia stock are on the IBD 50.
Dow Jones Futures Today
Dow Jones futures fell less than 0.1% vs. fair value, while S&P 500 futures slid 0.5%. Nasdaq 100 futures sank 1.2%, with Tesla stock and Apple retreating. Remember that overnight action in Dow futures and elsewhere doesn't necessarily translate into actual trading in the next regular stock market session.
Dow Jones futures will likely move on weekly jobless claims data, which will be released at 8:30 a.m. ET.
Coronavirus News
Coronavirus cases worldwide have hit 26.21 million. Covid-19 deaths are above 868,000.
Coronavirus cases in the U.S. are at 6.29 million, with deaths topping 190,000.
Meanwhile, the Centers for Disease Control and Prevention asked states to be ready for a coronavirus vaccine in early November by waiving certain licensing and permit requirements for McKesson (MCK) to set up coronavirus vaccination sites. That comes after the FDA said it might fast-track a Covid-19 vaccine for certain high-risk groups before large late-stage trials are completed.
Additionally, late Monday, Novavax (NVAX) released positive Phase one data for its coronavirus vaccine. The vaccine candidate is currently in Phase two trials, with several rivals in late-stage trials. Novavax shares rose overnight.
Coronavirus Stock Market Rally
The coronavirus stock market rally opened higher, but quickly pared gains with the Nasdaq moving lower. But from late morning the major indexes rebounded powerfully.
The Dow Jones Industrial Average jumped 1.6% in Wednesday's stock market trading, getting very close to its all-time highs. The S&P 500 index popped 1.5% and the Nasdaq composite 1%, both at record levels.
Apple, Tesla Stock Retreat
However, some extended stocks saw some selling. Apple stock fell 2.1%. Tesla stock, which pulled back 4.7% on Tuesday, sank 5.8% on Wednesday, but closed well off session lows and above its 10-day line.
At the same time, DocuSign (DOCU), which shot up 20.5% Tuesday, spiked higher again at Wednesday's open before reversing lower for a 1.35% decline. Shares did fall modestly overnight. DocuSign earnings are due late Thursday.
Who's Next?
It's almost as if investors looked around for techs that weren't going vertical and pushed them sharply higher. Microsoft gained 1.9%. Facebook stock jumped 2.4% and Google 3.8%. Nvidia leapt 3.8%.
Chip-equipment makers, which have been testing or undercutting 50-day support, were big winners. Lam Research (LRCX) climbed 6.5%, ASML (ASML) 3% and Entegris (ENTG) 2.7%. All three are on the IBD 50.
Meanwhile, LGI Homes (LGIH) and Dexcom (DXCM) made bullish moves near their 50-day lines, while Intuitive Surgical (ISRG) extended its steady breakout. All three are Leaderboard stocks as well.
Among the best ETFs, the Innovator IBD 50 ETF (FFTY) rallied 0.8%. The iShares Expanded Tech-Software Sector ETF (IGV) gained 0.5%. The VanEck Vectors Semiconductor ETF (SMH) shot up 2.65%, fueled by Nvidia stock, Intel (INTC) and chip-gear makers.
Stock Market Rally Extended
The Nasdaq composite has moved above the top of a regression line (the dotted line in the chart provided), and is at the top of a channel line on a weekly chart. It's increasingly extended from a long-term channel line going back to 2010 on a monthly chart.
All of that suggests the stock market rally is at risk of a pullback. And the risks are rising of a large pullback. The Nasdaq has frequently found support at or around its 21-day exponential moving average during the current market rally. But it's now 6% above its 21-day, the biggest closing gap since the early days of the rally. It's now 11.6% above its 50-day moving average. The 21-day is the green line on the chart provided, while the 50-day line is in red.
Even the S&P 500 index is starting to look extended. It's 4.6% above its 21-day line and 9% above its 50-day.
Just as the Dow Jones futures aren't a perfect indicator of next-day action, you're not going to be able to call the stock market top, either short term or long term. This is a good time to sell into strength, taking some profits. When the market does start to move lower, what is your game plan? How exposed do you want to be? Which stocks will you try to hold and which will you cash in?
Develop your strategy in the evenings or weekend, so you can act decisively without panic.
Keep in mind that if there is a constructive pullback, leading stocks will offer new buying opportunities, either via 10-week line pullbacks or new bases. You want your portfolio and your mindset positioned to take advantage. By taking some profits, you'll have firepower to make new buys while limiting your exposure if the pullback turns out to be more serious.
Reprinted from yahoofinance, the copyright all reserved by the original author.
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