Dow Jones futures were steady early Friday, while S&P 500 futures and Nasdaq futures rose. The stock market rally suffered significant losses, with the Nasdaq undercutting key support. Apple stock broke through the 50-day line, while Microsoft (MSFT), PayPal (PYPL) and FANG stocks Facebook (FB), Amazon.com (AMZN), Netflix (NFLX) and Google parent Alphabet (GOOGL) suffered notable damage.
On the plus side, Adobe (ADBE) and ServiceNow (NOW) found support at their 50-day line. Nvidia (NVDA) closed well off lows, near its 21-day and well above its 50-day. Tesla (TSLA) fell more than 4%, but is still up sharply for the week and above key levels. Rail operator CSX (CSX) edged higher, holding above a recent buy point. Target (TGT) and Home Depot (HD) are still consolidating constructively.
The S&P 500 rebounded from its 50-day moving average. But the Nasdaq gapped down below its 50-day line, though it didn’t undercut its Sept. 11 low and finished in the upper half of its daily range. Many recent breakouts showed weakness while some market rally winners such as Amazon stock are losing sight of key support.
Dow Jones Futures Today
The stock market rally remains under pressure, against the ropes, but hasn’t thrown in the towel. But it’s got the feel of a boxer who is just managing to stay upright despite several repeated blows.
Apple (AAPL), Amazon, Adobe, Microsoft, Nvidia, Netflix, ServiceNow, PayPal and Tesla stocks are on IBD Leaderboard. Microsoft stock, Adobe and PayPal are IBD Long-Term Leaders. Netflix stock, Adobe, Microsoft, PayPal, Nvidia and Amazon stocks are all on the IBD 50.
Dow Jones futures were flat vs. fair value, while S&P 500 futures advanced 0.2%. Nasdaq 100 futures rose 0.4%.
Remember that overnight action in Dow futures and elsewhere doesn’t necessarily translate into actual trading in the next regular stock market session. That’s especially true when markets are volatile.
Coronavirus cases worldwide reached 30.36 million. Covid-19 deaths topped 950,000.
Coronavirus cases in the U.S. have hit 6.87 million, with deaths above 202,000.
Stock Market Rally Thursday
U.S. Stock Market Today Overview
Last Update: 4:48 PM ET 9/17/2020
The coronavirus stock market rally extended losses after Wednesday’s negative reversal.
The Dow Jones Industrial Average retreated 0.5% in Thursday’s stock market trading. The S&P 500 index fell 0.8%. The Nasdaq composite sank 1.3%. The big-cap Nasdaq 100 sank 1.5% and undercut its Sept. 11 intraday low. It dropped to its worst level since Aug. 11, just before the Tesla stock split news sent techs on a final frenzy.
Tech Giants Retreat
Apple slid 1.6% to 110.34, closing just two cents below its 50-day line. Shares fell intraday to their worst level since early August. Microsoft stock sank 1.7% on Thursday, now 3.1% below its 10-week line.
PayPal stock slid 2.8%, now 6.8% under its 10-week line.
Tesla stock retreated 4.15%, but it’s still above its 21-day exponential moving average and up 14% for the week. Shares rebounded powerfully last week from a plunge to the 10-week line. But the whipsaw action in the past three weeks doesn’t offer a good buy point in the near term. The Sept. 22 Battery Day announcement is a big wild card that could trigger big Tesla stock gains or losses.
Adobe stock and ServiceNow stock undercut their 50-day lines but recovered to lose just a fraction. Nvidia stock also close well, off just 0.4%. It’s still well above its 50-day line.
Amazon, Netflix and Google fell further below their 50-day and 10-week lines, down 2.25%, 28% and 1.7%, respectively. Facebook stock tumbled 3.3% below its 50-day.
Amazon retreated along with many other e-commerce plays in recent days, as coronavirus gains wane somewhat. Netflix also may be seeing an end to the coronavirus boost. Google and Facebook face possible U.S. antitrust lawsuits in the next few weeks.
Among the best ETFs, the Innovator IBD 50 ETF (FFTY) retreated 1%. The iShares Expanded Tech-Software Sector ETF (IGV) sank 1.25%, with Microsoft, ServiceNow and Adobe stocks notable holdings. The VanEck Vectors Semiconductor ETF (SMH) edged down 0.2%, with Nvidia among its holdings.
No Clear Stock Market Trend
The stock market has looked dramatically different each day this week, with a crucial bounce on Monday, an encouraging gain Tuesday followed by Wednesday’s reversal and Thursday’s sharp selling. That’s partly due to the relatively narrow trading range over the week or so, where the market can swing from the ceiling to the floor within a day or two.
Looking at Dow Jones futures, and other market futures, could the stock market bounce from here? Sure. That’s the recent trend. But if you’re going by the recent trend, you’d expect the Nasdaq to quickly face resistance again around the 21-day line, or other short-term resistance. That’s not much upside.
On the downside, the 50-day line may act as resistance for the Nasdaq, which may simply head significantly lower.
This choppy market pattern is very difficult for growth investors. The major indexes will look like they’re about to take off, with leading stocks flashing buy signals, only for the market to pull back down. A stock market correction would offer clarity: Get out until a new uptrend forms.
But if the market isn’t giving you a punch to the jaw, it’s still nudging investors. Most new buys aren’t working. Some big stock market rally winners such as Amazon are breaking decisively through key support, giving up significant gains.
What To Do Now
Investors want to be paring back new buys unless they are among the handful of stocks that have made real progress. Evaluate big winners and decide whether they’re still worth holding through an extended choppy or weak market. What’s your game plan if the Nasdaq falls another 5%, 10%?
Build your watchlists. Alongside the tech names, don’t neglect promising stocks from the medical, retail, housing and transportation sectors, such as Target, Home Depot, Horizon Therapeutics (HZNP), United Parcel Service (UPS) or CSX. Non-tech sectors could lead in the next clear uptrend. Now’s the time to find and research them.
Most of all, stay engaged. Pay close attention to the stock market via the major indexes and leading stocks, especially those setting up near buy points. When market conditions clearly improve, you want to be ready to act decisively, not impulsively.
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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