Dow Jones futures tilted higher late Thursday, along with S&P 500 futures and Nasdaq futures. The coronavirus stock market rally pulled back Thursday, but was still up sharply for the week. Nvidia (NVDA), Splunk (SPLK) and Palo Alto Networks (PANW) led key earnings reports late, with China e-commerce giants Alibaba Group (BABA) and Pinduoduo (PDD) reporting early Friday. Meanwhile, Tesla (TSLA) poked above an aggressive early entry.
In extended trade, Nvidia stock was active but little changed. Splunk stock rallied after closing in buy range. Palo Alto stock jumped toward a consolidation high.
During Thursday’s session, Alibaba stock and Pinduoduo stock retreated amid some negative news, with BABA stock trading around various buy points.
Nvidia stock and Alibaba stock have best-possible IBD Composite Ratings of 99. Splunk stock has a 98 Composite Rating, while PANW stock and Tesla stock are at 97. PDD stock, which is not yet profitable, has a 90 CR.
Dow Jones Futures Today
Dow Jones futures rose 0.3% vs. fair value, along with Nasdaq futures. S&P 500 futures climbed 0.2%. Remember that overnight action in Dow futures and elsewhere doesn’t necessarily translate into actual trading in the next regular stock market session.
Coronavirus cases worldwide have reached 5.17 million. Covid-19 deaths are at 334,000.
Coronavirus cases in the U.S. are above 1.61 million, with deaths of at least 96,000.
President Donald Trump said he wouldn’t close the country if a second wave of coronavirus infections hits later this year.
Coronavirus Stock Market Rally
The coronavirus stock market rally is alternating between up days and down days so far this week. But the gains have been much larger than the losing sessions.
The Dow Jones Industrial Average dipped 0.4% on Thursday. The S&P 500 index shed 0.8%, and the Nasdaq composite lost 1%. But the major indexes are all up 3% or so for the week.
Among the best ETFs, the Innovator IBD 50 ETF (FFTY) slid 1.1%. The iShares Expanded Tech-Software Sector ETF (IGV) fell 0.8%. The VanEck Vectors Semiconductor ETF (SMH) retreated 2.5%, but is still up 5% for the week. Nvidia stock and AMD stock are key SMH components.
Successful investors don’t need to have winning trades all of the time or even most of the time. The key is to win big and limit losses, much like the coronavirus stock market rally this week.
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Tesla stock rose 1.5% to 827.60 on Thursday, hitting 832.50 intraday. That’s right on a downward-sloping trend line from the top of the handle on a daily chart or from the TSLA stock peak of 968.99 on a weekly chart. That could offer a very early entry on Tesla stock, perhaps a place to nibble at a few shares. However, investors might want to wait for Tesla stock to hit at least 834.39 or the conventional handle buy point of 869.92.
TSLA fell a fraction in extended trade. It’s barely worth mentioning, but that was enough for the stock to go back below the trend line.
Tesla stock has been very volatile in the last several months, with bulls and bears offering radically different views. On the plus side, TSLA stock has been trading relatively tightly in the past couple of weeks. Also, the relative strength line for Tesla stock is right at record highs. The RS line, the blue line in the charts below, reflects a stock’s performance vs. the S&P 500 index.
Nvidia earnings surged 105% to $1.80 a share while revenue grew 39% to $3.08 billion. Wall Street had forecast Nvidia earnings of $1.68 a share on sales of $2.98 billion.
The maker of chips for video games, artificial intelligence and data centers guided higher for Q2.
Nvidia stock dipped in up-and-down overnight trade. Shares fell 2.2% to 351.01 on Thursday. Nvidia stock is well-extended from a cup-with-handle buy point of 275.50 or alternative entries around 300.
The RS line for NVDA stock is just below all-time highs.
AMD stock tilted higher late. Shares fell 3.1% on Thursday to 54.64. AMD had crossed a handle trend-line entry on Wednesday, much like Tesla stock on Thursday, but is back below that level. The conventional buy point is 58.73.
Splunk lost 56 cents a share while revenue edged up 2% to $434.1 million. Analysts expected a loss of 57 cents on $443.2 million in sales.
The database and security software maker also guided low on Q2.
But cloud revenue surged 81% in Q1. Splunk is shifting to a subscription model, hitting current profit and sales in the short run.
Shares rose 4% overnight, after initially selling off sharply. Splunk stock edged up 0.1% to 163.45 on Thursday after clearing a 161.90 buy point from a deep cup-with-handle base, according to MarketSmith analysis. SPLK stock tends to be volatile, and has a history of failed breakouts in the past couple of years. But the RS line for Splunk stock is at a record high.
Palo Alto Earnings
Palo Alto earnings fell 11% to $1.37 a share in fiscal Q3, while revenue rose 20% to $869.4 million. Analysts had predicted Palo Alto earnings of 93 cents a share on sales of $829.5 million.
The cybersecurity firm also guided up for the current Q4.
Palo Alto stock jumped 7% to about 246 overnight. Shares closed down 2.1% to 229.50. But PANW stock has been racing higher from its March 18 low of 125.47 toward its 52-week high of 251.10. For now, Palo Alto stock has a 251.20 potential entry. But a handle would be constructive after a V-shaped pattern.
Analysts expect Alibaba earnings per share for fiscal Q4 2020 to fall 34% to 85 cents a share. Revenue should climb nearly 9% to $15.1 billion, but that would be the smallest gain in more than four years.
BABA stock fell 2.1% to 212.16 on Thursday, moving back below a 216.20 cup-with-handle buy point. Alibaba stock and several other U.S.-listed Chinese stocks fell again after the U.S. Senate approved legislation that could force them to delist from U.S. markets in three years.
But, for a second straight session, Alibaba stock found support around a downward-sloping trend line, which offered an early entry on Monday.
The RS line for Alibaba stock advanced from mid-2019 to late March, when the market crash bottomed. But it has trended lower during the coronavirus stock market rally.
Analysts see the No. 3 Chinese e-commerce firm reporting a per-share adjusted loss of 32 cents, vs. an 18-cent loss a year earlier. Revenue should show a 9.5% rise to $741 million, which would be its slowest pace in two years.
PDD stock closed down 1.5% to 60, pulling back after hitting a record 69.50 on Tuesday. Pinduoduo stock is extended from a 45.35 entry, or a 53.77 alternate buy point.
Please follow Ed Carson on Twitter at @IBD_ECarson for stock market updates and more.
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