Dow Jones futures will open Sunday night, along with S&P 500 futures and Nasdaq futures. The stock market boom has seen another strong week, with the Dow Jones, S&P 500 index and Nasdaq 100 all reaching record highs.
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The stock market march is now, according to IBD’s Market School, a power trend that meets all the criteria. The Nasdaq composition is higher than the 50-day moving average. The 50-day line is on an upward trend and the exponential moving average of 21 days is now five days in a row higher than the 50-day. A strength trend is another signal that the current stock market is strongly upward trend.
But there are some signs that the rise in the market is expanding too much, and that investors are becoming too bullish.
Sea Limited (SAY), Square (SQ), Cut (SNAP), 10X Genomics (TXG) and Netflix (NFLX) has newly formed handles with buying points. appeal (AAPL), Amazon.com (AMZN) and Tesla (TSLA) is working on possible handles.
Remember that the earnings of Snap and Netflix are in effect next week, while Apple’s shares, Amazon and Tesla are available next week.
Why this IBD tool simplifies the search for the best stocks
Investors should not take these shares and build a portfolio out of them, even if they all break out. Highly valued growth stocks were lagging behind in the current market march. Concentrating on one sector or investment theme can expose investors to a sell-out. A good example was the reversal of Wednesday in many story stocks, including Square, Snap, TXG and Tesla.
Concentrating on one area can mean missing out on profits in other sectors, such as steel, retail and home finance, amid an ever-changing stock market. It’s worth it to have some of these names – if it breaks out -.
Meanwhile, it Coinbase (COIN) is now a listed company. The exchange of cryptocurrency is very profitable with growing growth. But investors should not immediately jump into this new IPO.
Square stock is on IBD Leaderboard. Square and Snap stock are on the IBD 50.
Dow Jones Futures
Dow Jones futures open on Sunday at 6pm ET, along with S&P 500 futures and Nasdaq 100 futures.
Remember that overnight actions in Dow futures and elsewhere do not necessarily translate into stocks in the next regular session.
Markwizard Mark Minervini joins IBD Live on Monday while the panel trades the stocks and analyzes the market surveys.
Coronavirus News
Coronavirus cases worldwide have reached 140.50 million. The deaths from Covid-19 were 3.01 million.
Coronavirus cases in the US hit 32.30 million, with deaths above 579,000.
Stock market rally
The stock market boom again saw solid weekly gains, with the Dow Jones and S&P 500 reaching new highs.
The Dow Jones industrial average rose 1.2% in stock market trading last week. The S&P 500 index climbed 1.4%. The Nasdaq Composition rose 1.1%, while the large-cap Nasdaq 100 gained 1.45%. The Russell 2000 small team increased by 1%.
The ten-year treasury yield fell by 9 basis points to 1.57%. The big drop came despite strong growth and inflation data. Bond traders are apparently not so worried about the acceleration of inflation. Rising economic growth and low interest rates are a recipe for broad market profits.
Among the best ETFs, the Innovator IBD 50 ETF (FFTY) climbed 0.9% last week, while the Innovator IBD Breakout Opportunities ETF (BOUT) rose 1.1%. The iShares-enhanced Tech-Software Sector ETF (IGV) rose 2.9%. The VanEck Vectors Semiconductor ETF (SMH) fell 1.4%.
SPDR S&P Metals & Mining ETF (XME) jumped 4.1% and Global X US Infrastructure Development ETF (PAVE) added 1.3%. The US Global Jets ETF (JETS) fell 3.15% as travel games struggled.
ARK Innovation ETF (ARKK), which reflects more speculative story shares, rose 0.9% but withdrew from a ten-week line test on Wednesday. ARK Genomics ETF (ARKG) climbed 1.1%. Tesla is no. 1 investment for ARK Investments in its ETFs. Square shares are also a top five ARK Invest stock, while the ARKG ETF holds a fair stake in TXG shares. ARK has been buying significant COIN shares on various ETFs since Wednesday’s debut.
Growing sticks with handles
A handle is a great place to shake off weak containers. A proper handle should be flat to diagonally downward. It should last at least five days or one week. And the center of the handle should be above the center of the base, limiting the overhead supply. The point of purchase is 10 cents above the top of the handle.
According to MarketSmith, the SE stock has a cup-with-handle base with a 258.70 buy point on a daily chart. On a weekly chart, there is no handle, so the buying point will be 285.10. This is the first real basis for SE shares in at least a year.
Square stocks are working on a consolidation and are closer to record highs. After the SQ share rose for ten live sessions, it has retreated in recent days. This can be a healthy development. On a daily chart, a prototo handle needs a few more days to be proper. But on a weekly chart, SQ shares have a handle with a 278.23 buy point.
Snap stock works on a handle on a daily chart, but on a weekly chart it has a handle that is just above the center of the base. The buying point is 65.96. The potential buying point is just above the mid-March high of 65.13, which can be seen as a ‘W’ in a double-bottom base. Investors can also view the current pattern as a cup base with 73.69 entry. The quick earnings are payable Thursday night.
10X Genomics stock tried to break out on Wednesday after a buy point of 201.80, but as many growth games reversed lower. On a daily chart, TXG shares can form a high handle with a 203.30 entry. Technically, 10X Genomics has a high handle on a weekly chart due to the downward week. But the TXG share’s ‘down week’ was just under 0.3%.
Netflix stock has a grip on a weekly chart at 559.85. On a daily chart, NFLX shares are on track to get a grip after Tuesday, just in time for Netflix earnings after closing. Netflix is in a base going back to the end of January, but it’s really been going sideways since last July. Thus, the relative strength line became lower during that time. Investors may want to see a powerful breakthrough before subscribing to Netflix shares. This is not even a sure thing: NFLX stock jumped from a base to Q4 earnings, but fell sharply quickly.
Possible handles
Apple shares are technically three days in the grip, but an investor has to squint to see it. AAPL shares could use a good elimination in its handle attempt, perhaps with a weekly decline. But until then, Apple shares have a cup base with a buy point of 145.19.
Amazon stocks are working on a handle, though not much has been shaken out. However, the top of this prospective handle was just shy of the February 3 high of 3,344, which indicated the importance of the key level. For now, investors may view 3,434.10 as a buying point, as an early entry into a consolidation going back to early September, or as the peak of a cup base in the larger consolidation.
As with NFLX stocks, Amazon has been going essentially since July last year, giving an unfortunate RS line.
The Tesla stock jumped Monday and Tuesday, moving above its 50- and 10-weeklines as well as its March highs. But the stock reversed lower on Wednesday and started a possible handle. A handle may be valid on a daily chart after Tuesday, but a larger shake that appears on a weekly chart may be healthy. An important negative: the 50-day line of Tesla stock has been falling for more than a month.
Waiting for the COIN IPO Base
Coinbase is a giant for exchanging cryptocurrencies, making real dollars for its digital asset trading. It gets a lot of attention and can have a bright future. But this is not the time to jump to COIN stocks. It is better to make a new stock and set up a kind of base. An IPO base can be very short and is often very volatile. But they offer a much greater chance of success than buying a stock market in the first or first few days, without any real chart pattern.
Coinbase opened at 385 on Wednesday, running fast to 429.54, but then selling. After the first hour of trading, COIN shares traded just below 385. In the past two days, stocks have never reached more than 350 and closed at 342 on Friday. Anyone who bought COIN shares in the first few minutes is sitting with a big loss.
Market analysis
The rise in the stock market is now in a Power Trend, a positive signal. But the S&P 500 and Dow Jones are almost 6% above their 50-day moving averages. It is only shy of the 6% level that indicates that they are being extended. With Microsoft (MSFT), Google (GOOGL), Facebook (FB) and Nvidia (NVDA) which is reaching record highs and bouncing back Apple, Amazon and Tesla, it is not so surprising to see that the major indices are separate from key levels.
Just be on the lookout for a downside in the market, even if it is quite modest. Along with the ongoing interaction in the market, investors may be aware of significant new exposure in the short term.
Other possible issues: according to the Bulls vs. Bears reading and other psychological indicators, the strength of investors is relatively high. The rise in technological titans like Apple is hiding flat action in the Nasdaq up / down line.
Despite the continuing sector shifts, a diverse group of equities continued to benefit from the broad rise.
What to do now
We went from cyclical to chips to great technologies and back to cyclical. Balanced leadership means you can avoid too much exposure to a sector just before a turnaround. Keep a broad watch list, not just for possible purchases, but to help you be aware of which sectors are trending or lagging behind.
Go through your portfolio. You may want to consider increasing partial profits on some winning shares. How much patience do you give to stocks that are left behind or losing?
Read the big picture every day to keep up with the market direction and leading stocks and sectors.
Please follow Ed Carson on Twitter @IBD_ECarson for stock market updates and more.
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