Dow Jones futures briefly dropped 100 points early Friday, as the stock market rally takes a breather heading into the final trading session of 2021. Stock market leader Tesla was set to rise in morning trade. With the stock market just off record highs, these five top stocks — Applied Materials, Datadog, Fortinet, Huntsman and Icon — are in or near new buy zones.
Among the Dow Jones leaders, Apple (AAPL) fell 0.25% premarket Friday, while Microsoft (MSFT) lost 0.2% in today’s stock market. Also among the Dow 30, Home Depot (HD) continues to rebound from support, while Nike (NKE) fell back below a key level.
Electric-vehicle leader Tesla (TSLA) traded slightly higher premarket Friday. Its rival, Rivian (RIVN), was down 0.4%. Lucid Group (LCID) lost about 1%. And Chinese EV leaders Li Auto (LI) and Xpeng Motors (XPEV) were both sharply lower Friday morning ahead of their December sales reports, expected over the weekend.
Icon, Microsoft and Tesla are IBD Leaderboard stocks. Datadog is an IPO Leader. Fortinet was featured in this week’s Stocks Near A Buy Zone column. Applied Materials is an IBD SwingTrader stocks. Huntsman was Wednesday’s IBD Stock Of The Day.
Dow Jones Today
Ahead of the stock market open Friday, Dow Jones futures dropped 0.2% vs. fair value, while S&P 500 futures moved down 0.1%. Nasdaq 100 futures erased early losses to trade unchanged. Remember that premarket action in Dow Jones futures and elsewhere doesn’t necessarily translate into actual trading in the next regular stock market session.
Elsewhere, the 10-year Treasury yield ticked down below 1.51% Friday morning, following a fall to below 1.52% Thursday. U.S. oil prices dipped, threatening to snap a seven-day advance that left West Texas Intermediate crude more than 16% higher so far in December.
U.S. markets will operate on a normal schedule Friday’s New Year’s Eve session.
Stock Market Rally
The stock market posted mildly disappointing action Thursday, as the Dow Jones Industrial Average and S&P 500 reversed from new highs. The tech-heavy Nasdaq composite extended its losing streak to three sessions with modest losses.
Following some strong action last week, the market outlook is back in a “confirmed uptrend.” This gives investors a green light to buy top-rated growth stocks breaking out past correct buy points.
Thursday’s The Big Picture commented: “After a four-day rally through Monday, the major indexes are moderating their advance. The Nasdaq, which jumped more than 3% last week, has a mild three-day losing streak. The S&P 500 has gone nowhere since Monday’s 1.4% gain. Certainly, the market was due to pause after one of the hottest four-day streaks of the year. But Thursday’s negative reversals cloud the market just a bit.”
Through Thursday’s close, the Nasdaq is up 22.1% for the year, while the Dow Jones Industrial Average and S&P 500 are up 18.9% and 27.2%, respectively.
For daily stock market commentary, check out IBD’s The Big Picture.
Dow Jones Stocks To Watch: Home Depot, Nike
Home Depot stock dropped 0.2% Thursday, snapping a seven-day win streak that saw the stock rebound strongly from its 50-day support level. Amid the current win streak, Home Depot is again the No.1 Dow Jones performer in 2021, up 54.3% year to date through Thursday’s close. (The No. 2 Dow Jones stock is now Microsoft with a 52.6% advance.) HD shares were unchanged premarket Friday.
Dow Jones retail leader Nike is tracing a new flat base that has a buy point at 179.20, according to IBD MarketSmith chart analysis. Shares again lost their 50-day line during Thursday’s 0.8% decline, as they fight to decisively move above that resistance. It has a year-to-date gain of 18.4%. Nike shares were flat premarket Friday.
Stocks To Buy And Watch: Applied Materials, Datadog, Fortinet
IBD SwingTrader stock Applied Materials retreated below a 159.10 buy point in a flat base during Thursday’s 1.9% loss. Wait for a decisive move back above the buy point before purchasing shares. The 5% buy area runs up to 167.06. Applied shares were flat premarket Friday.
IPO Leader Datadog is approaching a cup base’s 199.78 buy point. Meanwhile, resistance around the 186 price level could provide an early entry for aggressive investors. Shares lost 0.4% Thursday, but remain above the 50-day moving average. DDOG shares were unchanged premarket Friday.
Cybersecurity leader Fortinet remains in the 5% buy area above a 355.45 buy point in a consolidation despite Thursday’s 1.9% loss. The buy area tops out at 373.22. Bullishly, the stock’s relative strength line hit a new high Monday on the breakout, confirming the stock as a market leader. The RS line measures a stock’s price performance vs. the S&P 500. Fortinet shares were flat premarket Friday.
IBD Leaderboard stock Icon is still in buy range past a 301.82 buy point in a consolidation, according to IBD MarketSmith chart analysis, in the wake of last week’s breakout move. The 5% buy area runs to 316.91. Per Leaderboard commentary, Icon also cleared resistance around 290, which served as an early entry. The stock was unchanged in early morning trade Friday.
Wednesday’s IBD Stock Of The Day, Huntsman, gave up a part of Wednesday’s breakout gains past a 34.57 flat-base entry during Thursday’s 1% decline. Shares remain in the 5% buy range that goes up to 36.30. HUN stock shows an 89 out of a perfect 99 IBD Composite Rating, according to the IBD Stock Checkup. Huntsman stock was unchanged premarket Friday.
EV Stocks: Li Auto, Xpeng, Lucid Motors, Rivian
Li Auto continues to work on a new base, after triggering the 7%-8% loss-cutting sell rule below a cup-with-handle base’s 34.93 buy point in early December. Shares surged above their 50-day moving average Thursday, rallying 8.6%, which is bullish price action as the stock looks to build the right side of a new base. The stock declined more than 1% premarket Friday.
Xpeng Motors activated a round-trip sell signal from a 48.08 buy point during early December’s sharp sell-off. XPEV shares surpassed resistance around the key 50-day moving average Thursday, jumping 10%. There is no correct buy point yet, but Thursday’s action was a step in the right direction. Shares slid 1.5% premarket Friday.
Lucid Motors shares lost about 1% premarket Friday, threatening to give back a part of Thursday’s 4.8% rise. LCID stock remains extended past a 28.49 buy point in a cup-with-handle base, but huge gains have faded. Shares are setting up for another try to retake the 50-day line, which would be a positive for the stock’s consolidation.
Recent initial public offering Rivian was slightly lower premarket Friday, pausing after Thursday’s 4.1% gain. RIVN shares closed Thursday about 42% off their post-IPO highs. Continue to wait for an IPO base to form before considering a purchase. Recent sharp losses are a significant setback in the stock’s basing process and there is no new buy point in sight.
Tesla stock rose 0.3% premarket Friday, looking to snap a three-day losing streak. On Monday, Tesla shares briefly topped a downward-sloping trendline buy point around 1,115 before closing beneath it. Getting above Tuesday’s intraday high could serve as a trigger, although forming a handle would be the most constructive chart action at this point. Meanwhile, a double-bottom base with a 1,202.05 buy point continues to take shape. And the stock is back at the 50-day moving average support level.
Shares traded as high as 1,243.49 on Nov. 4, but the stock ended Thursday about 14% off its 52-week high.
Dow Jones Leaders: Apple, Microsoft
Among Dow Jones stocks, Apple stock ended Thursday down 0.7%, but remains about 16% above a 153.27 buy point out of a cup-with-handle base, according to IBD MarketSmith chart analysis, and close to the 20%-25% profit-taking level. AAPL shares fell 0.25% premarket Friday.
Software leader Microsoft decisively regained its 50-day line last week, placing the top Dow Jones stock in a new buy area. Meanwhile, MSFT shares are forming a flat base with a 349.77 buy point with an early entry at 343.89. Shares moved down 0.2% premarket Friday, on pace to add to Thursday’s 0.8% decline.
Be sure to follow Scott Lehtonen on Twitter at @IBD_SLehtonen for more on growth stocks and the Dow Jones Industrial Average.
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