[ad_1]
Dow Jones futures will open on Sunday, along with S&P 500 and Nasdaq futures. The stock rally was deceptively bullish last week. Major indices fell slightly, but market internals improved somewhat as a number of leading stocks gave signals to buy.
X
Amazon.com (AMZN) was a big loser on Friday, delivering key earnings lessons to investors. Year (YEAR), Square (SQ) and datadog (DDOG) negotiate around points of purchase. But with profits at stake, investors have big decisions to make.
Meanwhile, the STLD stock is in a buy zone, with Steel dynamics (STLD) gains in the rear window.
Roku stock is on IBD 50. STLD stock was Thursday’s IBD stock.
The video embedded in this article analyzes Amazon, Roku, and Steel Dynamics stocks.
Dow Jones Futures Today
Dow Jones futures will open at 6 p.m. ET, as will S&P 500 and Nasdaq 100 futures.
Keep in mind that overnight action on futures contracts on Dow and elsewhere doesn’t necessarily translate into actual trades in the next regular trading session.
Join the IBD experts as they analyze the exploitable stocks in the stock market rally on IBD Live
Coronavirus news
Coronavirus cases around the world have reached 197.95 million. Covid-19 deaths have exceeded 4.22 million.
In the United States, coronavirus cases have reached 35.67 million, with deaths exceeding 628,000.
Stock exchange rally
The stock rally lost ground on the major indices but small caps and several sector ETFs gained.
The Dow Jones Industrial Average and S&P 500 Index fell 0.4% during stock trading last week. The Nasdaq composite fell 1.1%. The Russell 2000 small cap rose 0.7%, but touched resistance near its 50 day line.
Among the top ETFs, the Innovator IBD 50 ETF (FFTY) fell 1.25% last week, while the Innovator IBD Breakout Opportunities (BOUT) ETF fell 0.6%. The iShares Expanded Tech-Software Sector (IGV) ETF fell 1.1%. ETF VanEck Vectors Semiconductor (SMH) gained 2.3%, along with AMD (AMD), Qualcomm (QCOM) and COMPLAIN (KLAC) all winners of the prizes.
The SPDR S&P Metals & Mining ETF (XME) jumped 7% while the Global X US Infrastructure Development ETF (PAVE) gained 2.4%. The US Global Jets ETF (JETS) fell 0.5% while the SPDR S&P Homebuilders ETF (XHB) rose 1.5%. The Energy Select SPDR ETF (XLE) and the Financial Select SPDR ETF (XLF) rose 1.8% and 0.8%, respectively.
Reflecting more speculative stocks, ARK Innovation ETF (ARKK) fell 2% and ARK Genomics ETF (ARKG) lost 1.5%. The ARKK slipped back below its 200-day line on Friday. ARKG closed below its 50 day line, which is below 200 days. Both Roku and Square stock are among the top five holdings of ARK Invest ETFs.
Five best Chinese stocks to watch amid Beijing crackdown
Amazon Stock Price
Amazon shares sold on Friday after the sales and sales forecasts were released. Shares fell 7.6% to 3,327.59 on Friday, deviating well below the buy point of 3,524.96 and below the 50-day line. AMZN shares slipped 9% over the week. While this didn’t trigger the 7% to 8% sell rule for some investors, it still gave strong sell signals.
This is why IBD generally suggests having a cushion before profits. The size depends on your investing style, the size of your position and your conviction in the stock.
Meanwhile, Amazon’s report also stresses the importance of paying attention to big reports on profits from your holdings, especially if your stocks have yet to be released.
Amazon’s report is a bad sign for other ecommerce games. Etsy (ETSY) plunged 7.8% on Friday and 12% on the week. eBay (EBAY) lost just over 7% for the day and the week. Shopify (SHOP), which has already beaten views earlier in the week, fell a modest 1.6% on Friday, but fell 8.7% for the week.
Stock year
Roku stock fell 4.7% on Friday and 9.6% for the week, closing at 428.31. below a 463.09 handle cup buy point from a week earlier, according to MarketSmith analysis. The streaming media player is trying to find support at its 21-day moving average, but fell back to an early entry as it broke the downtrend of its grip.
Anyone who bought as a stock Roku has crossed the traditional buying point is down 7.5% or more, triggering the 7% to 8% automatic sell rule. Anyone who bought from the early entry saw a double digit gain erased, a strong sell signal as well.
Investors who bought the 10 week line in late July around 391, or earlier at resistance around 397, still have a modest gain.
Current investors in Roku shares therefore have a decision to make, especially if they are flat.
Other investors can watch and wait to see if there is an opportunity to buy after the profits.
Square stock
Square stock rebounded from its 50-day line on July 19, then climbed 11% that week, erasing a buy point of 254.88 points. But last week, SQ stock was down 6.3% to 247.26, with half of that drop occurring on Friday.
Again, recent buyers of SQ shares have a decision to make, with Square earnings expected Thursday night.
One possible tactic is to use a winning options strategy. A Square earnings options strategy was discussed in this week’s Earnings Overview article. But investors could use this strategy for Roku and other earnings reports to come.
Investors might see 267.87 as a new handle entry.
Data store
DDOG stock swung higher and lower last week, ultimately falling 0.5% to 110.70 for Friday and the week. Datadog stock is still above a buy point of 110.34 in a handle mug base, but only a fraction.
Datadog earnings are available Thursday night. There is always the possibility that DDOG shares will constitute a larger cushion, allowing investors to maintain at least a partial position. But you don’t want to be heading for results with a loss.
Dynamic steel stock
The stock of Steel Dynamics is another story. The gains are out of the way which eliminates this huge risk. STLD stock rebounded from bottom of base on strong earnings. On Thursday, it broke through a buying double floor of 63.28 amid strong results from several steelmakers. STLD stock fell slightly on Friday but remains in the buy range.
Market rally analysis
Major indices closed slightly lower last week after hitting record highs. Much of that was related to mega-cap technologies. Apple (AAPL) and Microsoft (MSFT) edged down on earnings while Facebook (FB) pulled out solidly and Amazon stocks fell. The only exception was Google parent Alphabet (GOOGL), which rose slightly after retreating from Wednesday highs.
More stocks entered the rally, with housing and steel among the new leaders.
There have been clear winners and losers, with reports spurring new buying opportunities.
Overall, the market rally has had a fairly good week. It doesn’t look that close to being lying down. The Nasdaq, finding support just above its 21-day moving average, is only 2.9% above its 50-day line. The Nasdaq 100 is 4.4% above its 50 days against 6.7% a week earlier. The scope of the market has improved a bit. It’s not great but at least it’s going in the right direction. And the number of buying opportunities and more diverse leadership is good news for active investors.
Time the market with IBD’s ETF market strategy
What to do now
Investors could have increased their exposure slightly last week, with some new buying perhaps partially offset by some selling before or after earnings.
Last week showed the importance of having a strategy before profits. Make sure you have a cushion.
There are still dozens of top stocks on sale next week, so know the pay dates for your holdings. With many big names on the sidelines, you don’t need to be so mindful of rivals’ win dates.
But be prepared to take advantage of the best shares on earnings or other news. Several recent escapes have spread rapidly. So, within a larger watchlist, have a “ready” list of actions near points of purchase. Use alerts, like in MarketSmith, so you don’t miss out on breakouts.
Read The Big Picture every day to stay in tune with the market direction and major stocks and sectors.
Please follow Ed Carson on Twitter at @IBD_ECarson for stock market updates and more.
YOU MAY ALSO LIKE:
Why this IBD tool makes it easier to find the best stocks
Want to get quick profits and avoid big losses? Try SwingTrader
Best growth stocks to buy and watch
IBD Digital: Unlock IBD Premium Stock Lists, Tools and Analytics Today
The IBD ranking celebrates its 10th anniversary! Celebrate with us
[ad_2]
Source link