Dow Jones Futures: Market Rally Takes Big Step; Google Stock Accelerating To Buy Point; Apple, AMC Stock In Focus
Dow Jones futures will open Sunday afternoon, along with S&P 500 futures and Nasdaq futures. The stock market rally had a dramatic turnaround Friday, with the S&P 500 closing at a record high while the Nasdaq rebounded bullishly back above its 50-day line.
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Google parent Alphabet (GOOGL), DocuSign (DOCU), Broadcom (AVGO), InMode (INMD) and Dell Technologies (DELL) are all near buy points. Google, Dell and DOCU stock are already flashing early entries.
Notably, all five boast multiple quarters of accelerating earnings and sales growth. Superior fundamentals are a great foundation for winning stocks.
Apple WWDC Event
Meanwhile, Apple kicks off its annual Worldwide Developers conference on Monday. Apple (AAPL) is expected to announce improved messaging features its operating system updates. The tech titan also could beef up privacy features further, stepping up its feud with Facebook (FB), which generates the vast majority of its revenue from digital advertising.
Apple stock rebounded above its 200-day line on Friday, rising 1.9% to 125.89. It has a new flat base with a 137.17 buy point. But the relative strength line for Apple stock is at 10-month lows, reflecting its long underperformance vs. the S&P 500.
Still, Apple stock is the world’s most valuable company, with a $2.1 trillion market cap. If the Dow Jones, S&P 500 and Nasdaq component does start moving, the stock market rally will get a noticeable boost.
Apple earnings and revenue growth have accelerated for the past two quarters.
Google and DOCU stock are on IBD Leaderboard, with InMode on the watchlist. Google stock also is on IBD Long-Term Leaders. Dell stock is on SwingTrader. INMD stock is on the IBD 50.
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Meme Stocks
AMC Entertainment (AMC), GameStop (GME), Bed Bath & Beyond (BBBY), BlackBerry (BB), Workhorse Group (WKHS) and other meme stocks had big to massive gains again last week, grabbing a lot of attention. AMC stock shot up 83% and somehow managed to close in the lower half of its weekly range. So did BB stock and WKHS stock.
Even with relatively modest declines on Thursday and Friday, AMC stock is 55% above its 10-day moving average.
AMC stock fell sharply late Friday.
Meanwhile, BBBY stock leapt 62% on Wednesday, yet finished the week up 13%. GameStop climbed 12% last week. In the context of crazed, whipsaw meme stocks, GME stock could be consolidating for another breakout on technicals. GameStop earnings are due Wednesday, with investors looking forward to what a revamped management team has to say about a possible digital-focused future.
With the stock market rally showing some momentum, including growth names, perhaps investor attention will return to more-traditional risky assets.
Dow Jones Futures Today
Dow Jones futures will open at 6 p.m. ET on Sunday, along with S&P 500 futures and Nasdaq 100 futures.
Remember that overnight action in Dow futures and elsewhere doesn’t necessarily translate into actual trading in the next regular stock market session.
Join IBD experts as they analyze actionable stocks in the stock market rally on IBD Live
Coronavirus News
Coronavirus cases worldwide reached 173.31 million. Covid-19 deaths topped 3.72 million.
Coronavirus cases in the U.S. have hit 34.98 million, with deaths above 612,000.
Stock Market Rally
The stock market rally had some twists and turns, but ultimately had a decent week.
The Dow Jones Industrial Average rose 0.7% in last week’s stock market trading. The S&P 500 index climbed 0.6% and the Nasdaq composite 0.5%. The Russell 2000 advanced 0.85%.
Among the best ETFs, the Innovator IBD 50 ETF (FFTY) popped 1.65%, while the Innovator IBD Breakout Opportunities ETF (BOUT) gained 1.5%. The iShares Expanded Tech-Software Sector ETF (IGV) edged up 0.5%. The VanEck Vectors Semiconductor ETF (SMH) climbed 0.9%.
SPDR S&P Metals & Mining ETF (XME) advanced 0.4% and Global X U.S. Infrastructure Development ETF (PAVE) rose 0.6%. U.S. Global Jets ETF (JETS) slumped 1.7% and the SPDR S&P Homebuilders ETF (XHB) retreated 1.9%. The Energy Select Sector SPDR ETF (XLE) shot up 6.8% as crude prices jumped.
Reflecting more-speculative story stocks, ARK Innovation ETF (ARKK) slid 2.3% and ARK Genomics ETF (ARKG) fell 1.8%.
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Google Stock
Google stock rose solidly Friday, clearing the June 2 high of 2,393.64 + 10 cents for an early entry before closing just below that level, at 2,393.57. Investors could still treat GOOGL stock as actionable here. The FANG stock has a flat base now with a 2,431.48 official buy point.
The only downside to Friday’s move was the light volume. But volume was higher than in the prior two sessions, both with mild Google stock declines.
The relative strength line for GOOGL stock is right at record highs. It’s held up very well.
On the fundamentals side, Google earnings and sales growth have accelerated for three straight quarters.
Google was Friday’s IBD Stock Of The Day.
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DocuSign Stock
DocuSign stock surged Friday in massive volume, the heaviest in six months. It broke a trend line and moved above the 50-day and 200-day lines. Investors could view that as an extremely early entry, a place to start a pilot position.
But it’s close to a traditional breakout. DOCU has been consolidating since early September, but investors could view it as a double-bottom base starting in February, with a 236.21 buy point. The middle of the W is above the midpoint of the base. The base is 35% deep, but that’s far less than a lot of other fallen leaders.
The RS line is a long, long way from old highs, reflecting an extended stretch of underperformance for DocuSign vs. the S&P 500 index. Investors might want to see the RS line get above its late April peak, around the middle of that W.
DocuSign just reported earnings growth of 267%, picking up for a second straight quarter. Revenue growth has accelerated for five quarters in a row, with a 58% jump in Q1.
Dell Stock
Dell stock is just below a 103.90 flat-base buy point, according to MarketSmith. The RS line is already at a new high on a weekly chart, giving it a blue dot.
Dell rebounded from its 50-day line on May 28 following earnings, then broke a short downtrend on June 1, offering an early entry.
Dell earnings grew 59% and revenue 12% in the latest quarter, both accelerating for three straight periods.
Broadcom Stock
Broadcom has reclaimed its 50-day moving average and is close to a 489.73 double-bottom buy point.
The RS line for AVGO stock has been lagging somewhat for three months, but it hasn’t been plunging.
Broadcom earnings growth has picked up for four straight quarters, and it reported a 29% EPS gain late Thursday. Revenue growth has slowly picked up for five quarters, to 15%.
InMode Stock
InMode now has a narrow, V-shape cup-with-handle base with an 87.10 buy point. Late in the week, INMD stock rebounded from its 50-day line, closing at 85.16.
The RS line has pulled back during its consolidation, but after a long run. Look to see if the RS line can clear the handle high on an INMD stock breakout.
InMode earnings and sales growth have accelerated for the past three quarters, hitting 130% and 62%, respectively, in the latest three-month period.
With people venturing outdoors without masks, InMode’s noninvasive cosmetic procedures are likely to be in high demand.
Market Rally Analysis
What a difference a day makes!
On Thursday, the S&P 500 and Dow tested their 21-day lines though they finished well above those levels. On Friday, the S&P 500 came within a whisker of a closing high, with an all-time best just above that.
The Nasdaq showed even more dramatic action. On Thursday, the tech-heavy index finished below its 50-day line. On Friday, it rebounded to short-term highs.
The jobs report buoyed the stock market rally on Friday. Hiring is picking up, but not so fast that the Federal Reserve will be in any hurry to even talk about tapering bond purchases. The 10-year Treasury yield fell several basis points Friday, continuing a multi-week decline, which is especially good news for the Nasdaq and growth stocks.
The Dow, S&P 500 and Russell 2000 have risen for two weeks, with the Nasdaq up for the past three weeks. All have been finishing high in their weekly ranges.
One note of caution: Friday’s volume was very light, coming on the heels of Thursday’s Nasdaq distribution day.
Investors should be looking for more institutional support in the coming days. Also, can the Dow and S&P 500 get to fresh intraday highs and the Nasdaq clear its June 1 peak — and hold above those levels? That should be an easy task — all the more reason for the stock market rally to take that next step.
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What To Do Now
With the stock market rally trending higher over the past few weeks, investors could add to their exposure, including some tech names.
Run through your screens this weekend to update your watchlists, which may have some turnover. The major indexes consolidating over the last several weeks, finding key support, is a strong backdrop for leading stocks forming new bases.
But don’t too excited. Don’t ramp up exposure rapidly, especially by pouring heavily into tech growth stocks.
While Friday’s action and the past couple of weeks have been encouraging, it wouldn’t be a shock to see the stock market rally retreat or moved sideways in a choppy fashion. Meanwhile, the market could easily shift away from techs again, especially if Treasury yields rebound.
So maintain some diversity in your leadership.
Most of all, follow your rules. Be selective in the stocks you buy and when you buy them. Don’t let losses get away from you. Disciplined investing can pay off. Reckless trading will not.
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.
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