Dow Jones futures rose modestly Sunday, along with S&P 500 futures and Nasdaq futures. The coronavirus stock market rally powered ahead last week, with the Nasdaq composite nearing all-time highs. Apple (AAPL), Microsoft (MSFT), Google parent Alphabet (GOOGL), Tesla (TSLA) and Advanced Micro Devices (AMD) are all near buy points.
None of these stocks seem particularly eager to break out, despite a strong week for the coronavirus market rally. Apple stock and Google stock both edged past buy points last week, but never closed above them. Tesla stock and AMD stock hit aggressive entries, but then backed off slightly. Microsoft stock barely moved last week.
Apple stock, Microsoft stock and AMD stock are on IBD Leaderboard. Tesla stock is on the Leaderboard watchlist. Google stock is on SwingTrader. AMD is on the IBD 50 list, along with rival Nvidia (NVDA) and several other chip names. MSFT stock is on the IBD Long-Term Leaders list.
Dow Jones Futures Today
Dow Jones futures rose 0.3% vs. fair value. S&P 500 futures advanced 0.25% and Nasdaq 100 futures climbed 0.25%.
The U.S. will likely impose sanctions on China if it goes ahead with draft national security law that would give Beijing more control over Hong Kong. U.S.-China tensions have been growing on a variety of fronts in the past few weeks.
While not as volatile as during the market crash, Dow Jones futures are still prone to big moves and overnight swings. Remember that overnight action in Dow futures and elsewhere doesn’t necessarily translate into actual trading in the next regular stock market session.
U.S. markets are closed Monday in observance of the Memorial Day weekend. But Europe and Asia are open.
Join IBD experts as they analyze actionable stocks in the coronavirus stock market rally on IBD Live.
Coronavirus cases worldwide have reached 5.48 million. Covid-19 deaths are above 346,000.
Coronavirus cases in the U.S. are at 1.68 million, with deaths topping 99,000.
A big question is whether states reopening economies will push up coronavirus cases. So far that hasn’t happened, though there would be lag. Most of the reopening moves are incremental, while mask wearing and other social-distancing efforts, along with spring-summer weather may help suppress transmission rates.
If new cases, hospitalizations and deaths trend lower, states will be able to further reopen, providing a bigger lift to the economy and coronavirus stock market rally. If Covid-19 trends worsen, states may keep a relatively tight lid on activity.
Memorial Day weekend is a big test, with many people in crowds or traveling in greater numbers than at any point since the coronavirus crisis hit the U.S.
The silver bullet for the coronavirus pandemic and an economic recovery is a vaccine. There are hopeful signs for some vaccine candidates, with buzz that some may be ready later this year. But everything has to go right. A coronavirus vaccine, especially for the broad public, may not be ready until late 2021 or beyond.
The U.S. is barring entry of all foreigners who’ve been in Brazil within the prior 14 days, the White House said Sunday.
Brazil has now passed Russia for the second-most coronavirus cases, with both countries continuing add a large number of new infections every day. Coronavirus testing is very low in Brazil. Several other Latin American countries, India and much of the Middle East are showing big increases in Covid-19 cases.
Stock Market Update: The Bull Rages To Higher Ground
Coronavirus Stock Market Rally
The coronavirus stock market rally quietly had another strong week. The Dow Jones Industrial Average rallied 3.3%, the S&P 500 index 3.2% and the Nasdaq composite 3.4%. The Nasdaq composite is getting close to record highs, while the S&P 500 index is close to its 200-day line. The 50-day moving averages for the Dow and S&P 500 have now turned up.
Apple stock rose 3.6% last week, outpacing the major indexes. Microsoft nudged up just 0.2%. Both AAPL stock and MSFT stock are members of the Dow Jones, S&P 500 and Nasdaq.
Among the best ETFs, the iShares Expanded Tech-Software Sector ETF (IGV) rose 3.5%, with MSFT stock as the No. 1 holding. The VanEck Vectors Semiconductor ETF (SMH) surged 5.2%. AMD and Nvdia stock are key components.
Recent breakouts have continued to shine, including Nvidia stock, Twilio (TWLO), Chipotle (CMG) and Datadog (DDOG).
But while Facebook (FB) and ASML (ASML) powered higher last week, the number of new breakouts has dwindled. That’s especially surprising. The S&P 500 confirmed the coronavirus stock market rally on April 2, with the Nasdaq following through on April 6. The powerful rally has propelled dozens of growth stocks past buy points and hasn’t paused for any significant length of time for those leaders to set up new bases.
That’s good news for investors who jumped into early breakouts, but the pickings are slimmer now.
A key reason to investors to start when there’s a follow-through day is because the big winners of a stock market rally often break out in those first few weeks. Another reason is that breakouts can be harder to find after several weeks of a market rally.
Read The Big Picture every day to stay in sync with the market direction and leading stocks and sectors.
Apple stock rose 3.6% to 318.89 last week. That’s just below a 319.79 buy point, though AAPL stock did hit 320.89 intraday Thursday. On a daily chart, 319.79 an alternate entry after clearing a cup-with-handle buy point of 288.35 at the end of April. On a weekly chart, that earlier handle didn’t appear, so 319.79 is a conventional cup-with-handle buy point for AAPL stock.
The relative strength line for Apple stock is right at record highs. The RS line, the blue line in the charts below, reflects a stock’s performance vs. the S&P 500 index. It’s a good way to spot leading stocks in good markets or bad.
AAPL stock has an IBD Composite Rating of 93.
Microsoft stock rose just 0.2% to 183.51 last week. That’s still in buy range from a 180.10 handle entry on what’s either a cup or double-bottom pattern. So investors could buy MSFT stock right here. But shares clearly seem to hitting some resistance. In fact, Microsoft stock now has a three-weeks-tight formation.
A three-weeks-tight is when a stock breaks out, advances some distance, then trades tightly for a few weeks. The stock must have weekly closes within 1%-1.5% of the prior week for two straight weeks. The buy point is 10 cents above the high of the three-weeks-tight. That gives a 187.61 entry in this case.
Typically, a three-weeks-tight is a place for existing investors to add a few more shares. But given that MSFT stock is still in the broader base, one could treat this three-weeks-tight as another handle, offering a chance to start a new position.
The RS line has drifted lower for the past couple of weeks as Microsoft stock consolidates. But moved higher during the market crash and the coronavirus stock market rally.
Microsoft was Thursday’s IBD Stock Of The Day.
MSFT stock has a best-possible 99 Composite Rating.
Google stock climbed 2.9% last week to 1,413.24, hitting 1,147 shortly before Friday’s close. GOOGL stock has a 1,415.63 cup-with-handle buy point, according to MarketSmith analysis.
The RS for Google stock is right at highs, with solid gains since earnings on April 28. But Google stock has not been a big winner over the past few years.
GOOGL stock was Friday’s IBD Stock Of The Day.
Google stock has a 96 Composite Rating.
Tesla stock rose 2.2% to 816.88 last week. TSLA stock, which has been very volatile in 2020, has been trading very tightly in the past few weeks. Another positive sign is that the RS line for Tesla stock is right at record highs.
Tesla stock has a handle buy point of 869.92. On Thursday, shares appeared to nudge past a downward-sloping trend line, but then fell slightly Friday. Investors probably should wait for Tesla stock to clear at least 843.39 (just above the May 12 peak) or the traditional handle entry of 869.92.
There is a wedge-like feel to the TSLA handle, so a short-term pullback could be healthy, whether to the 21-day moving average, below the May 13 low or even to near the May 1 low of 683.04. That would shake out some weak holders.
But Tesla stock is going to do what it’s going to do.
TSLA stock has a 97 Composite Rating.
Meanwhile, Tesla’s business is far more uncertain than the other companies on the list. A severe recession and high-income people often working from home isn’t a great recipe for luxury auto demand, while Tesla is losing market share in Europe, where electric vehicle competition is expanding rapidly.
AMD stock rose 1.8% to 55.17 last week, moving toward a 58.73 cup-with-handle buy point. Like Tesla stock, AMD ticked past a short trend line early entry but backed off. Investors should probably wait to clear Tuesday’s peak of 56.98 or simply wait for a traditional breakout.
After a six-month run to mid-April, the RS line for AMD stock has backed off, but not much.
The real concern with AMD stock isn’t its performance vs. the broader stock market rally but relative to other data-center chip stocks. Nvidia stock, Inphi (IPHI) and Monolithic Power Systems (MPWR) all have broken out and risen rapidly while AMD moves sideways.
AMD stock has a perfect 99 Composite Rating.
Please follow Ed Carson on Twitter at @IBD_ECarson for stock market updates and more.
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