Dow Jones futures rose modestly late Thursday, along with S&P 500 futures and Nasdaq futures. The coronavirus stock market rally had a mixed, whipsaw session, with Tesla (TSLA) and Dow stocks Microsoft (MSFT) and Walmart (WMT) masking some weakness in many growth names.
Workday stock soared, extending Tuesday’s breakout. Veeva popped, signaling a record high from a short consolidation. Okta retreated despite a first-ever adjusted profit, with the cybersecurity firm sinking toward its 50-day line. Ollie’s Bargain Outlet (OLLI) tilted higher in up-and-down trade. Bill.com, which hit a record high Thursday, signaled a move back into its short consolidation.
Stock Market Rally Roller Coaster To Nowhere
Thursday’s whipsaw market action, with the Nasdaq swinging up and down before settling for modest losses, was not especially surprising. The stock market rally has been on fire, especially big-cap techs. But the Nasdaq composite has been getting extended from the 50-day moving average and even the short-term 21-day exponential moving average. On a long-term basis, the tech-heavy index is noticeably extended from a trend line going back to 2010.
Growth Stocks Retreat, Damage Contained
Growth stocks got hit. In many cases, they just pared a tiny fraction of recent gains, including Apple (AAPL), Adobe (ADBE), Alibaba (BABA), Netflix (NFLX) and Facebook (FB). But chip gear makers Applied Materials (AMAT), Lam Research (LRCX) and Teradyne (TER) all fell through their 50-day lines.
Microsoft rose 2.5% and Walmart stock jumped 4.5% on word that the two Dow Jones giants are teaming up on an offer for the U.S. operations of TikTok, even amid buzz that Oracle (ORCL) might also bid for the Chinese-owned social media giant. With President Donald Trump poised to ban TikTok by Sept. 15 and the new CEO abruptly resigning, a deal reportedly could happen in days. Microsoft stock jumped, hitting a fresh high. Walmart also hit a new high, reclaiming a buy zone.
Tesla stock rose 4%, hitting fresh all-time highs.
Meanwhile, some medical stocks that stand to benefit from a waning pandemic fared well. Intuitive Surgical stock broke out, Edwards Lifesciences (EW) cleared a second buy point and Novocure (NVCR) extended a breakout from a very deep cup-with-handle base.
Intuitive Surgical (ISRG) joined IBD Leaderboard and SwingTrader on Thursday. Tesla, Microsoft, Apple, Adobe, Ollie’s Bargain Outlet and Netflix also are on Leaderboard. Apple, Netflix and Facebook stock are on SwingTrader. Microsoft, Adobe and Alibaba stock are on IBD Long-Term Leaders.
Adobe, Alibaba, Amazon, Microsoft and Netflix stock are all on IBD 50. So are Veeva stock and Workday — along with LRCX, AMAT and TER.
Dow Jones Futures Today
Dow Jones futures rose 0.25% vs. fair value. S&P 500 futures climbed 0.25%. Nasdaq 100 futures advanced 0.3%. 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 are at 24.58 million. Covid-19 deaths have topped 834,000.
In the U.S., coronavirus cases have hit 6.03 million, with deaths above 184,000.
Coronavirus Stock Market Rally
U.S. Stock Market Today Overview
Last Update: 4:26 PM ET 8/27/2020
The coronavirus stock market rally had an up-and-down session, especially the Nasdaq.
Before the open, Fed chief Jerome Powell confirmed a big policy shift to boost inflation, signaling that rates will stay lower for longer. But he didn’t signal more aggressive action in the near term, such as increased asset purchases. While marking an important change for the Federal Reserve, Powell’s speech didn’t come as a notable surprise. So despite an easy-money, pro-inflation tone, Fed chief Powell’s speech spurred a rise in the dollar and Treasury yields, with gold and silver falling.
The Dow Jones Industrial Average rose 0.6% in Thursday’s stock market trading, boosted by Microsoft and Walmart. The S&P 500 index climbed 0.2%. The Nasdaq composite fell 0.3%.
Apple stock, a member of the Dow Jones, S&P 500 and Nasdaq composite dipped 1.2%. Alibaba lost 2.7%, Adobe 3.4%, Facebook 3.5% and Netflix stock 3.9%. But all of those stock charts look fine.
Among the best ETFs, the Innovator IBD 50 ETF (FFTY) fell 1.5%. The iShares Expanded Tech-Software Sector ETF (IGV) dipped 0.45% after surging 5.4% on Wednesday. Adobe and Microsoft are IGV notable holdings. The VanEck Vectors Semiconductor ETF (SMH) slid 1.4%, with LRCX, TER and AMAT stock all notable holdings.
Stock Market Rally Game Plan
At the intraday lows, the Nasdaq was down 1%, just a portion of Wednesday’s gains. But many growth stocks suffered bigger losses, though chart damage was relatively limited. The tech-heavy index — still notably extended on a long-term basis — is 4.4% above its 21-day line and 9.2% above its 50-day line. The stock market rally has had several pullbacks to the 21-day. A retreat to the 50-day average wouldn’t be a surprise.
So investors should have a game plan. If the Nasdaq falls 3%, many growth leaders might fall 6% or even 10%. What would you do in that situation, knowing that further market losses would be normal?
If you have a game plan in place, you can act decisively but not engage in panic selling.
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