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Shares surged, then turned mixed on Wednesday as the Nasdaq rebounded into the Veterans Day trading session. The early lead narrowed as finances came under pressure as many declines from Monday and Tuesday rebounded. Home games, including Zoom Video, and tech growth names like Qorvo, led the early breakthroughs. FuboTV’s initial public offering skyrocketed on earnings. Salesforce.com topped the Dow Jones today.
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The Dow Jones industrial average briefly jumped 160 points, then reversed into a fractional decline as American Express (AXP) and Travelers (TRV) fell hard at the start of the trade. The S&P 500 gained 0.5%. The Nasdaq jumped 1.4%, seeking to recapture part of its two-day decline. Small caps lagged as the Russell 2000 struggled with a tight early decline.
Chip stocks have traded high on the S&P 500, with Qorvo (QRVO) and Skyworks Solutions (SWKS) each up more than 4%. The VanEck Vectors Semiconductor ETF (SMH) rose 2.8% from the start.
ServiceNow (NOW), Cadence systems (CDNS) and PayPal funds (PYPL) all scrambled over 4% higher. The move put ServiceNow in a buy range on a rebound from the 10 week support. The rate is 1% lower at a buy point of 117.69.
Initial Public Offering FuboTV (FUBO) climbed 24% early in trading as Roth Capital raised the share price target to 29, from 20, despite a third-quarter shortfall reported on Tuesday night. Shares of the streaming sports service ended Tuesday at 42% of their initial offering on October 8.
Among the bioitechs, Five Prime Therapeutics (FPRX) climbed over 300% in early trading. Analysts rushed to high price targets for the south-San Francisco-based company after announcing on Tuesday that its bemartiuzumab was working better than expected, treating advanced gastric or gastroesophageal junction cancer in phase trials 2. Wells Fargo raised the stock price target to 34 from 5 with an overweight rating. Wedbush rose to 28 from 9 and held onto its outperformance rating.
Get ready for Wednesday’s market action by reading IBD Investment Action Plan.
Nasdaq 100: Video zoom, Nvidia Rebound
On the Nasdaq 100, Video zoom (ZM), Free market (MELI) and Qualcomm (QCOM) led with gains of over 5%. All three stocks had suffered heavy losses on Monday and Tuesday.
A number of coronavirus-related stocks also jumped in early rebounds. Co-diagnosis (CODX) rose 5.7% ahead of its third quarter report on Thursday. Teledoc Health (TDOC) jumped 2.3%, with early gains ending with a price target cut from Truist.
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China-based stocks were mixed in early trading. Game platform Huya (HUYA) climbed 2.6% after releasing third quarter results. Tencent Music Entertainment (TME) slipped 1.1% after profits, parent of Tencent Music Tencent Holdings (TCEHY) fell 2.3% ahead of its quarterly report, due Thursday.
Alibaba Holding Group (BABA) fell 0.3 %%, slowing the two-day slide triggered by increased antitrust regulation in China.
Dow Jones Today: Salesforce
Salesforce.com (CRM) paced the Dow Jones today, up 2.7% as the stock moved to break a three-day decline. Shares ended 9% on Tuesday below a 270.26 buy point in a double bottom basis.
Microsoft (MSFT) climbed 2%, rebounding from support to its 50-day line after a two-day pullback. Microsoft stock is 8% below a buy point of 232.96 on an 11-week basis.
Chevron (CVX) jumped more than 1%, spurred by a surge in oil prices. West Texas Intermediate rebounded 2.6% early in trading, to nearly $ 43 a barrel and its highest level since early September.
IBD 50 shares: Futu, Vici In Bases; Berry in the shopping area
Logitech (LOGI), ServiceNow and Futu Holdings (FUTU) topped the IBD 50 list in early trades. All of them jumped more than 5%. The gain moved Futu to within 8% of a buy point of 41.09 in a cup base.
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IBD Ranking Stock Palantir (PLTR) rose 7.6% in first trades. The stock is extended above a base IPO buy point at 11.52. The data mining software game is expected to release its third quarter results on Thursday evening.
IBD 50 stocks currently below buy points in valid bases include Futu Holdings, Materials applied (AMAT), and Vici Properties (VICI). All were up at the start of the trade. Global Berry Group (BERY) was in a buy range after passing a double base buy point on Monday.
A hesitant rally
The current status of the stock market is “confirmed bullish trend”, but the action doesn’t look much like a rally. Many eruptions tend to stall or fail. Many higher quality growth stocks have seen their chart action weaken as stocks break support levels or base models take damage.
The market appears to be rethinking the premise that the Nov. 3 election underscored what many read as continued GOP control over the Senate. A GOP Senate would mean a balance of power in Washington, working to verify the Democratic-controlled House and Presidency. This logic drove much of the rally last week.
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But three contests remain undecided in the Senate. Two of those, the second round slated for Jan.5 in Georgia, could potentially produce a 50-50 Senate. Considering moderate GOP positions such as Susan Collins of Maine and Lisa Murkowski of Alaska, this would give Democrats an edge on some issues. On others, where the divided Senate was tied, a Vice President Kamala Harris would vote strongly.
A morning research note from Yardeni Research pointed out that the prospects for a deadlocked Congress were not yet certain. “If Democrats win both Senate races in Georgia on Jan. 5, a Blue Wave tsunami could still occur,” the note said.
Georgia’s outcome determines the Senate
Georgia has not elected a Democratic senator for 20 years. But the record turnout among registered Democrats, and President-elect Joe Biden’s so far narrow lead over President Donald Trump, leaves a narrow window of uncertainty over the outcome of the Senate races. Atlanta’s WXIA News Channel 11 reported on Tuesday that 91 of Georgia’s 159 counties had certified their election results, with Biden leading Trump by 12,651 votes. All states are required to certify the results of their votes by November 20.
National elections have so far left Senate Republicans with 49 seats, Democrats with 48 seats. Only two-thirds of the votes have so far been counted in a still undecided Senate race in Alaska. But the results there currently lean heavily in favor of incumbent Republican Daniel Sullivan. The race looks likely to give the GOP its 50th Senate seat.
Georgia remains the wild card. State law requires Senate races to take place in the second round if neither candidate claims 50% of the vote in the general election. So far, both races appear to favor incumbent Republican candidates over their Democratic rivals.
Another rally for the Dow Jones today?
The larger market, including the Dow Jones today, looks set for an opening rally on Wednesday. Growth stocks lagged the Dow’s rally on Monday and Tuesday. There have been a number of breakdowns. Among these, Alibaba Group (BABA) launched its 10-week moving average and dived into antitrust news in China. Names such as Chegg (CHGG) and Trex (TREX) also shattered support as the market reacted to news about vaccines from Pfizer (PFE), which has led to speculation about how the coronavirus pandemic could play out.
For a more detailed analysis of the current stock exchange and its status, study the big picture.
But the vast majority of IBD 50 leaders simply fell back into their pre-election squat. Western Pharmaceutical Services (WST), Cadence Design Systems (CDNS) and Intuit (INTU) are good examples.
Meanwhile, names including Commercial office (TTD), Generac (GNRC), Integris (ENTG) and Teradyne (TER) has only moderately pruned their recent big gains. Many others stay in viable bases or buy ranges. These include Futu Holdings, Applied Materials, Berry Global and Vici Properties.
Go back to the squatting pre-election
It’s a market that requires investors to keep a handle on their stock purchases. The rules of sale must be respected. Maybe that means stepping back into a higher cash balance for now, while continuing to look for breakouts that work and avoiding stocks that appear to be staying in their pre-election rump.
It is not known if this bifurcation will continue until January 5. Additional coronavirus vaccine news, or any range of announcements coming out of Washington are just two things that could tip the markets into a new mode of commerce.
But part of the market that has shifted on the likelihood of split control in Washington has returned to a hold pattern. This challenges investors to find ways to navigate this part of the market or reflect this behavior themselves.
Find Alan R. Elliott on Twitter @IBD_Aelliott
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Dow Jones wins 150 points, as tech stocks retract
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