Dow Jones futures and S&P 500 futures edged down on Tuesday night. Futures on the Nasdaq fell slightly on Netflix stock, which was making headlines in search engines for after-hours income. This follows another tough session for the stock rally.
Growth stocks and small caps sold on Tuesday, with Futu Holdings (FUTU) crashes after a powerful breakout on Monday. But travel games have also plummeted, with steelmakers, miners, energy companies, manufacturers and financiers all retreating.
The tech titans have held up reasonably well, with Microsoft (MSFT), parent of Google Alphabet (Google T Facebook (FB) roughly flat. Apple (AAPL) declined slightly after its “Spring Loaded” product event, but has outperformed in recent weeks. But the strong action of Google Stock, Microsoft, etc. masked recent weakness.
Netflix (NFLX) reported post-close profits, as well as Intuitive surgery (ISRG), Edwards Lifesciences (THAT ONE), CSX (CSX) and Tenet Healthcare (THC).
Netflix’s profits exceeded views, but the 3.98 million subscriber growth was much lower. Netflix faces a post-pandemic environment amid growing competition from Disney (DIS) and its Disney + streaming service.
NFLX stock plunged 9% overnight, signaling movement below the 50-day and 200-day lines. Stocks reversed the decline on Tuesday to plunge 0.9% to 549.57. Netflix stock has a buy point of 559.85 from a small handful on a weekly chart, as well as a downtrend line just below that level. But that may not be relevant if NFLX stock plunges on Wednesday.
The DIS stock lost a fraction overnight. Disney stock fell 2.5% on Tuesday, dipping below its 50-day line and near the low of its flat base.
Year (ROKU) fell 4% overnight, as continued growth globally slows down. ROKU stock fell 1.7% on Tuesday, continuing to retreat after hitting resistance at its 50-day line.
Other key gains
The benefits of intuitive surgery have exceeded the expectations of the leader in robotic and surgical systems. ISRG stock rose 4% to around 842 in extended trading after the shares closed 8 cents at 811.11. The Intuitive Surgery Stock has a buy point of 812.89 from a double bottom basis.
Edwards Lifesciences earnings exceeded views, with the medical device maker guiding the second quarter and full year. The EW stock jumped 4% in overnight trading. Shares rose 1.2% on Tuesday to 89.63, moving into a buy zone from a double bottom buy point of 88.30, according to MarketSmith analysis.
CSX revenue missed while revenue exceeded. CSX stock fell 1.5% at the end of the trade. Shares fell 0.3% on Tuesday after hitting a record intraday high. CSX stock is extended from a point of purchase.
Tenet Healthcare’s revenues exceeded the hospital operator’s sights. The stock of THC increased by almost 3% overnight. Tenet stock fell 1% to 52.04 on Tuesday, just below its 50-day line, but in a short consolidation it’s almost an appropriate base. The buy point for the THC stock is 57.98. But investors could use 54.98, just above Friday’s high, as an early entry with a rebound from the 10 week line.
ASML (ASML) Results are expected Wednesday morning, with another chip-gear giant Lam Research (LRCX) on tap after close Wednesday. ASML and LRCX shares fell on Tuesday but remain in buy zones.
Apple product event
Apple announced a few new iPads and Macs with their internal chips at their “Spring Loaded” product event, as well as the launch of Air Tag tracking devices. It also provides a podcast subscription service. Apple stock fell 1.3% to 133.11. It is possible that the AAPL stock is forming a handle on a daily or weekly chart this week. It could also form a tight three-week pattern. Both would offer lower buying points. But for now, the official cut base entry is 145.19.
LRCX and Microsoft are listed on the IBD rankings. The MSFT stock is a long term leader of IBD. Lam Research and the ASML stock are on IBD 50.
Dow Jones Futures today
Futures contracts on Dow Jones fell 0.1% from fair value. S&P 500 futures fell 0.15%. Nasdaq 100 futures fell 0.4%. NFLX stock held back Nasdaq futures.
Keep in mind that overnight action on Dow futures and elsewhere doesn’t necessarily translate into actual trading in the next regular trading session.
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Coronavirus cases around the world have reached 143.53 million. Covid-19 deaths have exceeded 3.05 million.
Coronavirus cases in the United States have reached 32.53 million, with deaths exceeding 582,000.
Johnson & johnson (JNJ) resumed shipments of its one-shot coronavirus vaccine after European regulators deemed it safe with some new guidelines after reviewing a handful of cases with very rare but serious blood clotting problems. Vaccines against J&J have been on hold in the United States for several days over fears that healthcare professionals may not recognize this type of clotting, which requires different treatment than more common blood clots. An FDA panel is expected to recommend resuming the J&J vaccine on Friday, perhaps with some restrictions or guidelines.
JNJ stock rose 2.3% to 166.48 on news of vaccines and better-than-expected earnings, breaking a trendline and briefly erasing an early entry of 167.13 for giant Dow Jones. The relative strength of J&J stock is weak and has been generally declining since 2009.
Stock exchange rally Tuesday
The stock rally took serious hits on Tuesday, with widespread weakness among major stocks.
The Dow Jones Industrial Average fell 0.75% in stock trading on Tuesday. The S&P 500 index lost 0.7%. The Nasdaq composite sank 0.9%. The Russell 2000 slid just over 2%.
Among the top ETFs, the Innovator IBD 50 ETF (FFTY) fell 2.7%, while the Innovator IBD Breakout Opportunities ETF (BOUT) fell 1.9%. The iShares Expanded Tech-Software Sector (IGV) ETF fell 1.1%. Microsoft stock is IGV’s largest holding, while many software stocks suffered larger losses. The VanEck Vectors Semiconductor ETF (SMH) fell 1.4%. ASML and LRCX actions are remarkable SMH components.
The SPDR S&P Metals & Mining ETF (XME) fell just over 3% while the Global X US Infrastructure Development ETF (PAVE) lost 1.1%. US Global Jets ETF (JETS) plunged 4.1%. United Airlines (UAL) The results and forecast criticized airline stocks and other travel-related games.
Reflecting more speculative stocks, ARK Innovation ETF (ARKK) fell 0.9% and ARK Genomics ETF (ARKG) fell 1.2%, both pulling further off their 21 and 50 day lines. Roku stock is one of ARK Investment’s top five stocks.
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Analysis of market rallies
Once again, the stock rally has taken more damage than major indices would indicate. The Dow Jones and S&P 500 retreated for a second consecutive session after appearing nearly elongated late last week. The Nasdaq composite lost more ground, but found support at its 21-day line and above its March lows.
The small-cap Russell 2000 fell to its lowest level so far this month. That’s after Monday’s 1.4% pullback to return below its 50-day line.
Major stocks suffered heavy losses, with many buying points undercutting or breaking key support. Futu stock plunged 23%, slumping below a buy point and its 50-day line after a stock offer was announced on Monday night. On Monday, stocks climbed 16%.
But it wasn’t just a matter of rotating out of growth stocks. Cyclicals related to commodities also retreated, as did retailers related to housing, chips, software, banking, travel and more. Some leaders seem relatively healthy, but a portfolio of “healthy” losers and “unhealthy” losers is not a winning strategy.
What to do now
It was already a “hard penny” market, to quote Mark Minervini, even when the major indices were on the rise. At this moment, they are falling.
Investors should naturally reduce their exposure when they are stopped from stocks. You may want to cut losses and consider taking profits on some winners, especially those whose gains decrease to become profits.
Please follow Ed Carson on Twitter at @IBD_ECarson for stock market updates and more.
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