Dow Jones Futures: Stock Market Rally Risks Mount; Tesla Falls, Hot IPOs Rocket and CrowdStrike Crash At Earnings

Dow Jones Futures: Stock Market Rally Risks Mount; Tesla Falls, Hot IPOs Rocket and CrowdStrike Crash At Earnings

Dow Jones’ futures declined early Thursday, while S&P’s 500 futures declined modestly, and Nasdaq’s futures endured some pressure. The stock market rally quickly shook off a shakeout on Wednesday, closing near session highs, aided by the news of the coronavirus vaccine. But the threats of market exit continue to rise.

Microsoft (MSFT), Facebook (FB), Google parent Alphabet (GOOGL), Nvidia (NVDA), and chip-equipment makers went well, as Apple stock, Tesla (TSLA), and some white-hot tech makers retreated.

TSLA’s stock dropped sharply early Thursday, weighing on tech futures. Apple’s missing ground, too.

Earnings in the Stock Market Future

Meanwhile, the recent IPO Rocket Companies (RKT), CrowdStrike (CRWD), MongoDB (MDB), and Five Below (FIVE) announced quarterly earnings late on Wednesday. Costco Wholesale (COST) posted sales in August.

After a beat-and-raise release, CrowdStrike ‘s stock dropped sharply overnight. MongoDB has also exceeded earnings expectations. MongoDB stock popped below the official purchasing rate but above the early entry.

However, amid booming earnings growth, Rocket stock plummeted overnight, while the parent of Quicken Loans sees a slightly slower loan growth in the current Q3.

In recent sessions, Rocket Companies and the 2019 IPO CrowdStrike cybersecurity IPO were on the rising. CRWD’s stock had reversed fewer Wednesday but had substantial gains, helped by last week’s (CRM) results and Tuesday’s Zoom Video (ZM) results.

On the upside, Five Below’s stock jumped on solid earnings and sales overnight. Shares of the teen-focused discounter reached a buying point on Wednesday.

Costco’s stock climbed modestly the night after rising to a fresh high Wednesday. August’s revenue grew 15 percent to $13.56 billion, at least the third consecutive month of strong growth.

Wednesday’s stock market rally started sharply higher, but Nasdaq turned lower as fresh signs of extension blinked. But instead of beginning a pullback, the tech-heavy index reversed higher, while the Dow Jones and S&P 500 indexes outperformed. The CDC is warning states that it will be ready for a coronavirus vaccine at the beginning of November.

Microsoft, Apple (AAPL), Nvidia, and Tesla are all on the IBD leaderboard. Costco and Facebook are on SwingTrader. Microsoft’s stock is on the IBD Long-Term Leaders list. The stock of MSFT and Nvidia is on IBD 50.

Dow Jones Futures

Dow Jones futures dropped a fraction vs. fair value, while S&P 500 futures dropped by 0.2 percent. Nasdaq’s 100 futures sank 0.8 percent, with Tesla’s portfolio and Apple falling. Note that overnight activity in Dow futures and elsewhere does not necessarily translate into real trading at the next daily stock market session.

Dow Jones futures are likely to switch to weekly jobless claims results, published at 8:30 a.m. ET, man.

News of Coronavirus

Coronavirus cases have reached 26.20 million worldwide. Covid-19 deaths are over 867,000.

Coronavirus infections in the U.S. are 6.29 million, with deaths as high as 189,000.

Meanwhile, the Centers for Disease Control and Prevention requested states to be ready for coronavirus vaccine in early November by waiving some licensing and licensing criteria for McKesson (MCK) to create coronavirus vaccination sites. That comes after the FDA said that a Covid-19 vaccine could be quick-tracked for certain high-risk groups before major late-stage trials are completed.

Additionally, late Monday, Novavax (NVAX) published promising Phase 1 results for its coronavirus vaccine. The vaccine candidate is currently in phase two trials with a range of rivals in late-stage studies. The shares of Novavax rose overnight.

Rally Coronavirus Stock Market

U.S. Stock Market Today Overview
IndexSymbolPriceGain/Loss% Change
Dow Jones(0DJIA)29099.05+453.39+1.58
S&P 500(0S&P5)3580.62+53.97+1.53
Nasdaq(0NDQC )12056.44+116.77+0.98
Russell 2000(IWM)158.46+1.25+0.80
IBD 50(FFTY)39.87+0.31+0.78

The coronavirus stock market rally opened up higher but quickly walled gains with the Nasdaq moving lower. But the major indexes rebounded powerfully from late morning.

The Dow Jones Industrial Average jumped 1.6 percent on Wednesday’s stock market trading, getting very close to its all-time highs. The S&P 500 index was 1.5 percent, and the Nasdaq composite 1 percent, both at record levels.

Apple, Tesla Retreat Stock

However, some of the extended stocks have seen some sales. Apple’s stock was down 2.1 percent. Tesla’s share, which dropped 4.7 percent on Tuesday, sank 5.8 percent on Wednesday but closed well off session lows and above its 10-day line.

At the same time, DocuSign (DOCU), which soared by 20.5 percent on Tuesday, jumped up again on Wednesday’s open before reversing down by 1.35 percent. Shares fell modestly overnight. DocuSign’s earnings are due late on Thursday.

Who’s the next one?

It’s almost as if investors were looking around for technologies that weren’t going vertically and pushing them up sharply. Microsoft has gained 1.9 percent. Facebook’s stock jumped 2.4 percent, and Google’s 3.8 percent. Nvidia jumped 3.8 percent.

Chip-equipment makers, who were testing or undercutting 50-day support, were big winners. Lam Research (LRCX) increased 6.5 percent, ASML (ASML) 3 percent and Entegris (ENTG) 2.7 percent. All three of them are on the IBD 50.

Meanwhile, LGI Homes (LGIH) and Dexcom (DXCM) made bullish moves near their 50-day line, while Intuitive Surgical (ISRG) extended its steady breakout. All three of them are Leaderboard stocks as well.

Among the best ETFs, the Innovator IBD 50 ETF (FFTY) accounted for 0.8%. The iShares Expanded Tech-Software Sector ETF (IGV) increased by 0.5 percent. VanEck Vectors Semiconductor ETF (SMH) has increased by 2.65 percent, fuelled by Nvidia stock, Intel (INTC), and chip-gear manufacturers.

Extended stock market rally

The Nasdaq composite has moved above the top of the regression line (the dotted line in the chart provided) and is at the top of the weekly chart’s channel line. It is increasingly extended from a long-term channel line back to 2010 on a monthly chart.

All of this suggests that the rally on the stock market is at risk of a pullback. And the risks of a big pullback are rising. Nasdaq has frequently found support on or around its 21-day exponential moving average during the current market rally. But now it’s 6 percent above its 21-day gap, the biggest closing gap since the early days of the rally. It is now 11.6 percent above its 50-day moving average. The green line on the given chart is 21-days, while the 50-day line is red.

Even the S&P 500 index is starting to be extended. It is 4.6 percent above its 21-day line and 9 percent above its 50-day line.

Just as the Dow Jones futures aren’t the perfect indicator of next-day action, you won’t be able to top the stock market, either in the short or long term. It’s a good time to sell into strength to make some profits. When the market starts to move down, what’s your game plan? How exposed would you like to be? Which stocks are you going to try to hold, and which are you going to cash in?

Develop your strategy in the evenings or on the weekends so that you can act decisively without panic.

Keep in mind that if there is a constructive pullback, leading stocks will offer new buying opportunities, either through 10-week line pullbacks or new bases. You want your portfolio and your attitude to take advantage of it. By taking some profits, you’re going to have the firepower to make new purchases while limiting your exposure if the pullback turns out to be more serious.

Read The Big Picture every day to keep up with the market direction and the leading stocks and sectors.