Dow Jones futures rose modestly late Thursday, along with S&P 500 futures and Nasdaq futures. The stock market rally extended losses on stimulus deal doubts but closed well off session lows, with Apple stock among several big cap techs working on lower buy points.
The stock market rally opened sharply lower and struggled in the early going amid stimulus deal concerns, rising coronavirus cases and big losses by Fastly (FSLY) and Vertex Pharmaceuticals (VRTX). Fastly stock and Vertex plunged, but the broader impact was limited. Datadog (DDOG) and Veeva Systems (VEEV) briefly undercut buy points but then rebounded higher.
Tesla stock is on IBD Leaderboard, along with Microsoft, Adobe, Veeva and Zoom Video. Amazon stock, Datadog, Apple, Veeva and Zoom Video stock are on SwingTrader. Microsoft stock and Adobe are on IBD Long-Term Leaders. Veeva stock, Amazon and Microsoft are on the IBD 50.
Intuitive Surgical (ISRG) reported earnings after the close. Intuitive earnings and revenue fell less than expected, but the robotic surgical system maker did not offer guidance. ISRG stock fell 4% overnight.
Dow Jones Futures Today
Dow Jones futures rose 0.25% vs. fair value. S&P 500 futures advanced 0.35% and Nasdaq 100 futures climbed 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 reached 39.15 million. Covid-19 deaths topped 1.1 million.
Coronavirus cases in the U.S. have hit 8.21 million, with deaths above 222,000.
Stock Market Rally
U.S. Stock Market Today Overview
Last Update: 4:08 PM ET 10/15/2020
The stock market rally opened Thursday with sharp losses, especially on the Nasdaq. But the major indexes rebounded, with the Dow Jones and S&P 500 briefly turning positive before fading again.
The Dow Jones Industrial Average closed down 0.1% in Thursday’s stock market trading. The S&P 500 index dipped 0.15%. The Nasdaq composite sank 0.5%.
President Donald Trump said he could go higher than $1.8 trillion on a new coronavirus stimulus deal, signaling a desire for a deal with less than three weeks to Election Day. House Democrats want $2.2 trillion, and still cite differences. Perhaps more important, Senate Republicans want a much-smaller bill.
Get A Handle On Apple, Amazon
The Dow Jones and other major indexes have pulled back for three straight days. Not surprisingly, many big-cap techs have followed suit and are starting to form possible handles.
A handle offers a lower entry point — 10 cents above the top of the handle. A handle needs at least five days on a daily chart or one week to form, but can run over several weeks. It must be flat to downward-sloping, ideally in light volume. The goal is to shake out weak holders, not see a big money exodus.
Apple stock, Amazon, Microsoft all closed down less than 1%. Adobe stock did fall 1%.
Of course, there’s no guarantee that a handle will form. The share price might spike higher or tumble. And even if there is a proper handle, that doesn’t guarantee a successful breakout. But these are worth watching.
Zoom Video stock popped 5.3% to 536.40, clearing the 529.84 buy point. Zoom is essentially the stock of the year, the ultimate coronavirus play, with massive growth and a 688% year-to-date share price gain.
Tesla stock fell 2.7% to 448.88, just undercutting a 448.98 early entry on Wednesday. Tesla earnings are due on Oct. 21.
Among the best ETFs, the Innovator IBD 50 ETF (FFTY) edged down 0.3%. The iShares Expanded Tech-Software Sector ETF (IGV) lost 0.4%, with Microsoft stock and Adobe key holdings. The VanEck Vectors Semiconductor ETF (SMH) also sank 0.4%.
Stock Market Rally Analysis
Wednesday’s pullback seemed normal, especially in reaction to Monday’s surprising surge in megacap techs like Apple and Amazon stock. The big losses Thursday morning weren’t great to see, but the major indexes and top stocks came off their lows, with many leaders closing higher.
As we like to say on IBD Live, let’s pull up the weekly chart.
From that perspective, the Nasdaq is in the lower half of its weekly range, but is still heading for yet another weekly gain. The S&P 500 is slightly higher for the week while the Dow Jones is slightly down.
The weekly action doesn’t look great. But it’s not too surprising given the negative news — stalled stimulus talks, coronavirus headlines, the Fastly warning — along with election uncertainty. After several weeks of gains, a “meh” week is fine.
If a number of top stocks fill out handles and then break out in the next week or two, then this week’s market pause will look constructive. But that bullish scenario hasn’t happened yet.
Investors should still be careful about increasing exposure from here. Earnings season is starting to get underway, and adds yet another layer of uncertainty. Buying right ahead of earnings is fraught with peril.
Read The Big Picture every day to stay in sync with the market direction and leading stocks and sectors.
Please follow Ed Carson on Twitter at @IBD_ECarson for stock market updates and more.
YOU MAY ALSO LIKE: