Dow Jones futures tipped lower early Friday, while S&P 500 futures fell and Nasdaq futures tumbled as Treasury yields rose again.
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The stock market rally had a strong session on Thursday when the S&P 500 index and Russell 2000 joined the Dow Jones in a new high field. The Nasdaq composition led with a sharp rise, but the volume was light.
Arcelor Mittal stock and Regal Benoit (RBC) was hit by a number of “blue dot” outbreaks on Thursday, while Microsoft’s stock, Google parent Alphabet (GOOGL) and Dynatrace (DT) flash buy signals.
On Wednesday, IBD announced that the rising trend had resumed with the closing of the Dow at a new high and many real economy stocks broke out. The stock market rally has expanded further. Nasdaq made a strong move and reached some key levels, although it did not qualify as a follow-up day. Growth stocks recovered.
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After closing, DocuSign (DOCU) and Ulta Beauty (ULTA) main earnings reports headings. The DOCU share has fallen modestly despite strong results and guidance. Ulta shares fell with a poor outlook and the retirement of the CEO.
Meanwhile, it Novavax (NVAX) reported an efficiency rate of 96.4% compared to the original coronavirus strain in the final analysis of a phase three UK trial. NVAX shares jumped overnight.
Shares In Buy Zones
Global steel giant Arcelor Mittal (MT), the generator and car manufacturer Regal Benoit, manufacturer of contract electronics Jabil circuit (JBL), new shipping exchange Zim Integrated Shipping Services (ZIM) and Discover financial (DFS) all broke out Thursday.
MT stocks and the others all have relative strengths at new highs, reflecting their performance against the S&P 500 index. RS lines at a new high while still in a base or about to break out is a particularly bullish trend. So MarketSmith marks such stocks with a blue shadow point at the end of the RS line.
Meanwhile, it Dynatrace (DT) broke a downward trend and flashed a buy signal. Microsoft (MSFT) regained a buying point and moved back a few other levels. Google shares flash some early buy signals.
Arcelor Mittal shares, Regal Benoit, Discover and Google have joined Microsoft on IBD Leaderboard. Microsoft shares are on IBD long-term leaders. Google shares are on the IBD 50 list. RBC shares were Thursday’s IBD stock of the day.
Dow Jones Futures Today
Dow Jones futures fell less than 0.1% to fair value. S&P 500 futures fell 0.5%. Lost Nasdaq 100 futures fell 1.4%.
The ten-year treasury yield rose six basis points to 1.59% early Friday, rising to the top of its recent range.
Remember that overnight actions in Dow futures and elsewhere do not necessarily translate into stocks in the next regular session.
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Coronavirus News
Coronavirus cases worldwide reached 119.16 million. The deaths from Covid-19 were 2.64 million.
Coronavirus cases in the US hit 29.21 million, with deaths above 543,000.
President Joe Biden said late Thursday that he would order the states to be eligible for the coronavirus vaccine by May 1.
According to Novavax, the Covid vaccine reported an efficacy rate of 96.4% compared to the most common strain in a phase three trial. In a phase 2b trial in South Africa, the Novavax vaccine had an efficacy rate of 55.4% against HIV-negative participants, as the B1.351 variant present was more difficult to block under different vaccines.
However, the Novavax vaccine has been 100% effective in preventing serious illnesses, including all hospitalizations and deaths.
Novavax will not seek US approval until data from a US trial is available, but it is also likely to show strong results.
The Novavax share rose more than 20% overnight. NVAX shares soared in the early January to early February on preliminary vaccine results, but gave it back almost all before a recent bounce.
Earlier Thursday, new research showed further evidence that the Pfizer (PFE) and BioNTech (BNTX) coronavirus vaccine is extremely effective.
Stock market rally
The rise in the stock market expanded, with more indices at record highs, more stocks breaking out and the growth names continued to recover from the strong sales. President Biden on Thursday signed the $ 1.9 billion spending bill.
The Dow Jones industrial average rose 0.6% in stock market trading. The S&P 500 index rose 1% and Russell 2000’s small capital rose 2.3%, both to record highs. The Nasdaq composite jumped 2.5%, hitting the 21-day exponential moving average and the 50-day line.
Before the opening on Thursday, the ten-year treasury yield fell to as low as 1.48% and later rose to about 1.54%. The yield closed 1 basis point at 1.53% after a 30-year Treasury auction. Yields fell Wednesday after a 10-year Treasury auction.
Among the best ETFs, the Innovator IBD 50 ETF (FFTY) rose 4.5%, while the Innovator IBD Breakout Opportunities ETF (BOUT) rose 4.75%. Both jump back above their 50-day line. The iShares Expanded Tech-Software Sector ETF (IGV) climbed 3.1%, with Microsoft’s largest share. The VanEck Vectors Semiconductor ETF (SMH) rose 4.2%.
As a result of more speculative story shares, Ark Innovation ETF rose 6.2% and Ark Genomics ETF 5.6%.
Read the big picture every day to keep up with the market direction and leading stocks and sectors.
Blue Dot Specials
Arcelor Mittal shares rose 7.7% to 26.77 and broke a 25.85 cup base in the heaviest volume since 30 June. The relative strength line for MT shares is at a new high. This makes Mittal stock a blue dot special.
Regal Benoit share rose 3.6% to 148.82, above a buying point of 147.07 from a cup base. The volume was the heaviest in years for RBC shares.
Zim Integrated Shipping’s share rose 14.5% to 23.35, reaching a new high and reaching a 22.68 buy point from an IPO base. The volume was the heaviest since February 2, the fourth trading day for ZIM shares. The ZIM stock market became known at 15 shares and quickly ran up before a new issue was halted. Zim has been profitable with a booming profit in the last quarter. It will deliver its first ever ever public earnings report on March 22nd.
Discover Financial shares climbed 2.7% to 102.27, above a buy point of 101.06. The volume was below the average for DFS shares, and continued a trend.
The Jabil Circuit stock rose 5.25% to 47.71, removing a 42.28 buying point from a flat base in an above-average trade. This follows a sharp rise in JBL shares from early November to mid-January. Note that Jabil’s earnings are payable next Tuesday, so JBL shares do not leave much room to get a cushion.
IBD stock of the day gains strength to buy zone amid faster growth
Technical stocks flicker buy signals
Dynatrace shares rose 5.9% to 54.11, starting a downward trend with its February 9 high of 56.77. With the correction of the market, the share of DT fell slightly back to its old base, but found support in the 50-day line and recovered quickly. It is much better than most growth software. Investors may now take a small position and perhaps use a decline below Wednesday’s low of 50.46 as a sell signal.
Microsoft stock rose 2% to 237.13, regaining its 232.96 buying point and its 21-day line. MSFT share is just 2.2% higher than its ten-week line, offering a possible entry into long-term leader. Microsoft shares could form a new base with a potential 246.23 subscription. Keep in mind that the RS line for MSFT has been dragging on for several months. But it’s been held better over the last few weeks than most technologies.
Google shares climbed 3.2% to 2,100.54 and bounced back from its 21-day line. GOOGL share has a tournament of 2,145.24. Investors can sign up early here, with Google shares above each preceding weekly close. The RS line is also just below the record high last week.
Analysis of stock market marches
On Wednesday, the Dow Jones moved to a new high. The price-and-action movement of that day was strong enough to be a follow-up day, but IBD decided that the Dow had never fallen enough to be considered a correction. The market direction is therefore moving towards ‘Uptrend CVs’, with a strong bias towards the real economy.
The question for Thursday was therefore how the divided market would behave. Would the Nasdaq join the rising trend, or would it bring the broader market down again?
On Thursday, the Dow Jones moved further into new high ground, while the S&P 500 and Russell 2000 also peaked.
The Nasdaq composition rose sharply above key levels. But Nasdaq volume fell slightly compared to Wednesday. Thus, Thursday did not qualify as a follow-up day to confirm the Nasdaq market march.
Rising treasury yields have put pressure on stock growth and have been a major catalyst for sales over the past few weeks. This is therefore of concern for the longevity of any market march, especially growth stocks, especially if the ten-year treasury yield moves above its recent range in the 1.4% -1.6% zone.
What investors need to do now
If the market is in a rising trend, investors should try to add exposure. Look for stocks breaking out or sending other bullish signals. Most of these will be real economy names, with the exception of Dynatrace, Microsoft and Google.
Most growth stocks have major repairs. Yes, if you buy these names when they bounce back from below and keep walking, you see huge profits. But if the Nasdaq reverses, sales could be just as fierce. The goal is not to buy at the lowest possible price, but at a price where your chances of success are higher.
Investors can also buy ETFs, such as SPY or a broad sector ETF. More aggressive traders may enter QQQ or a growth ETF such as IGV, SMH or FFTY as a way to play a growth season with few individual names in position.
Don’t feel compelled to step on the gas, especially not in this unusually split market. You may want to save powder for growth stocks if and when the names become usable again. If the Nasdaq also sells heavily, the broader market will come under pressure.
Let the stock market pull you in. If the rally gets steamy and more stocks break out, your exposure will gradually increase.
Please follow Ed Carson on Twitter @IBD_ECarson for stock market updates and more.
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