Stock futures hovered in narrowly positive territory early Monday, as markets moved to wrap up an unusually strong August. Tech stocks showed early strength. Facebook and Chipotle Mexican Grill each rose near buy points. Dynavax led the IBD 50 list, Catalent jumped on earnings. Home Depot rebounded toward a buy point on the Dow Jones today.
Dow Jones futures, S&P 500 futures and Nasdaq 100 futures all rose a fraction above fair value. Small caps narrowly outpaced the early action, with Russell 2000 futures gaining 0.2%. The market heads into the last couple of sessions of August sitting on its strong performance from last week. But this week’s action could be more muted as investors await yet another crucial monthly payrolls report, due on Friday, from the Labor Department.
China-based stocks were mixed early Monday after the country’s regulators rolled out a new set of rules limiting online game playing for children. Games provider NetEase (NTES) fell more than 7%. Search engine operator Baidu (BIDU) traded 0.9% higher, leading the Nasdaq 100.
Chip stocks were rising, with Nvidia (NVDA), Lam Research (LRCX) and Advanced Micro Devices (AMD) all up less than 1%. The VanEck Vectors Semiconductor ETF (SMH) showed a 0.4% premarket gain. Nvidia is an IBD Leaderboard stock.
Medical research services provider Catalent (CTLT) rallied almost 3% after reporting a strong fiscal fourth-quarter performance. The move suggested the stock would move into extended territory, after clearing a 124.15 buy point in a cup-with-handle base a week ago.
Dow Jones Today: Amgen, Home Depot, Microsoft
Amgen (AMGN) climbed 0.6% to lead the Dow Jones today. Home Depot (HD) ran a close second with a 0.5% gain. Home Depot has been struggling to maintain support at its 10-week moving average, after a brief breakout above a cup-with-handle base buy point at 335.55. The stock has pulled back no more than 6% below that mark, stopping short of the trigger for the automatic sell rule.
IBD 50, Leaderboard: Dynavax, Square
Dynavax Technologies (DVAX) headed the IBD 50 list, up more than 6% as investors continued to react to the company’s roll out, a week ago of its Covid-19 vaccine. More than 600,000 doses of the vaccine, developed jointly with Medigen Vaccine Biologics, were expected to be administered last week. Dynavax shares rose more than 40% for the week.
Also on the IBD 50 list, software IPOs Monday (MNDY) and Doximity (DOCS) were both up more than 1% in early trade. Leaderboard stock Square (SQ) gained 1.1%, after ending Friday in a buy range above an alternate handle entry at 267.87. Square’s buy zone runs to 281.26.
Overseas Markets Positive, China Tech Clamp Down Continues
Oil futures were down slightly, although gasoline prices climbed as markets responded to offshore shutdowns caused by Hurricane Ida in the Gulf of Mexico. Bond yields were effectively unchanged.
China’s markets opened the week on a positive note, carrying over last week’s rebound rally. The Shanghai Composite gained 0.2%. Hong Kong’s Hang Seng rallied 0.5%. The Shanghai benchmark heads for the final session of August riding a 3.9% gain so far for the month. The Hang Seng is down 1.6%.
China’s National Press and Publication Administration imposed a new rule limiting online game playing for persons under 18 to one hour a day from Friday through Sunday, and on holidays. NetEase dived more than 7% on the news. Among China-based ETFs, the iShares MSCI China ETF (MCHI) dipped 0.1% in premarket trade. The Xtrackers Harvest CSI 300 China A-Shares ETF (ASHR) was down 0.9%. The KraneShares CSI China Internet ETF (KWEB) added 0.2%.
Europe’s markets were on positive ground near midday. Frankfurt’s DAX and London’s FTSE 100 each rose 0.3%. The CAC-40 in Paris climbed 0.2%. The SPDR Portfolio Europe ETF (SPEU) was inactive, after bouncing 1.6% last week following a test of support at its 10-week moving average. The fund is trading 1% below a 44.06 entry in what IBD MarketSmith analysis marks as an 11-week flat base.
Stocks To Watch: Chipotle, Facebook
Chipotle Mexican Grill (CMG) is sitting on a powerful six-week advance, closing Friday just above a 1,912.85 buy point. The buy point is in a four-weeks tight pattern, a more bullish variation of a three-weeks tight. The buy range extends to 2,008.49.
Facebook (FB) is queued up in a five-week flat base with an entry at 377.65. The base is a third-stage base, not yet late stage. This suggests that, if a breakout occurs, the stock could still have some room to run. Facebook was featured as an IBD Sector Leader on Friday.
Nasdaq, S&P 500, Dow Jones Today
The Dow Jones today is climbing toward the sixth session since its rebound from a test of support at its 50-day moving average. The index gained 1.5% for the month through Friday, and is riding nicely above its 21-day moving average. That marks a strong August, a month in which the Dow has averaged a 0.68% decline over the past decade. The Dow has now gained in six of eight months since the start of the year, and is sitting on a year-to-date 15.8% through Friday.
For more detailed analysis of the current stock market and its status, study the Big Picture.
The S&P 500 has gained in six of the past seven sessions. It notched a 1.5% gain last week after its pullback stopped just shy of a test of 50-day/10-week support. The benchmark is for now in strong standing, holding comfortably at a new high, above its 21-day line and sitting atop a seven-month rally. It is up 2.6% in August, vs. an average loss of 0.5% over the past ten years. The index is up 20% since Dec. 31.
The Nasdaq Composite has charged ahead in August, racking up a 3.1% advance for the month through Friday. That’s not unusual, as the Nasdaq has averaged a 0.4% gain for the month over the past 10 years, vs. the average declines for the Dow and the S&P 500. However, on an annual basis, the Nasdaq’s 17.4% gain still lags the S&P 500. But it turned in a market-leading 2.8% advance last week, jumping also to a new high and flashing sudden strength as the market heads into September.
YOU MAY ALSO LIKE: