Dow Jones futures fell moderately late on Wednesday, along with the S&P 500 and Nasdaq. The Dow Jones sank moderately on Wednesday as the Nasdaq fell to fresh lows, but the stock market rally is still not “completely dead.”
For the shares of the real economy, Wednesday was normal or even positive. Boeing (BA), Citigroup (° C), Flagstar Bancorp (FBC) and I had (AVNT) cleared purchase points or early entries.
The sell-off for growth continued as the Nasdaq hit its February 23 level during the day. Stay home plays Amazon.com (AMZN), Video scaling (ZM), Teladoc Health (TDOC), Data dog (DDOG) and 2U Inc. (TWOU) all failed under long-term support. Tesla (TSLA) withdrew until the bottom closes by 2021, while Nvidia (NVDA), Year (ROKU) and ServiceNow (NOW) has fallen firmly below its 10-week lines.
Marvell Technology (MRVL), Snowflake (SNOW), Octa (OKTA) and Splunk (SPLK) headlines earnings late Wednesday. But all of those technology stocks were falling apart or splitting into quarterly results, falling sharply on Wednesday.
Marvell’s profits were consistent and the guidelines were mixed. Snowflake reported strong revenue growth, while Okta and Splunk won. Shares of Okta collapsed overnight on a $ 6.5 billion acquisition. Marvell fell sharply as SNOW stocks rose slightly. Splunk’s stock, which is at a 10-month low, has grown steadily.
Tesla Stock and Nvidia are in the IBD rankings. ServiceNow shares are on IBD’s list of long-term leaders. Shares of Tesla and Nvidia are on IBD 50.
Dow Jones Futures Today
Dow Jones futures fell 0.3% to fair value. S&P 500 futures fell 0.4% and Nasdaq 100 futures fell 0.6%.
Remember that overnight stocks in Dow futures and elsewhere do not necessarily become real trading in the next regular session of the stock market.
Join IBD experts as they analyze active stocks in the IBD Live stock rally.
The incidence of coronavirus worldwide reached 115.76 million. Covid-19 deaths reached 2.57 million.
Coronavirus cases in the United States have reached 29.45 million, with more than 531,000 deaths.
Stock market rally on Wednesday
The stock market rally sold out, closing at the lows of the session. The names of the real economy lingered as technology giants gave way and speculative names sold out.
The Dow Jones industrial average fell 0.4 percent in trading on Wednesday after being slightly positive for most of the session. Boeing shares were a key winner in the Dow, but Apple (AAPL) and Microsoft (MSFT) weighed on blue chips. The S&P 500 index fell 1.3%, again below its 21-day line, but remained slightly above the 50-day. The Nasdaq composite fell 2.7%, breaking its 50-day line and undermining its February 23 level.
The yield on the 10-year-old treasure rose 6 basis points to 1.47% after retiring in recent days. The sharp rise in long-term government bond yields has put pressure on the stock market, especially speculative growth.
Among the best ETFs, the innovative IBD 50 ETF (FFTY) slipped 3.5%, while the ETF (BOUT) fell 3.25%. The IShares Expanded Tech-Software Sector ETF (IGV) fell 4.1%, with Zoom Video and NOW remarkable components. VanEck Vectors Semiconductor ETF (SMH) lost 3.15%. NVDA shares are top SMH holding.
Reflecting more speculative historical stocks, the Ark Innovation ETF (ARKK) collapsed by 5.9% and the Ark Genomic Revolution ETF (ARKG) by 6.3%. Both undercut the last lows as the ARKK closed below them.
Tesla is the largest holding company in Ark Investment’s ETF, including ARKK. Shares of Teladoc and Roku are also Ark’s top five holdings, while Ark bought many shares of Zoom on Tuesday. Ark also has significant stakes in much smaller, less liquid names. They will be difficult to get out, especially since Ark Invest discloses much of its daily purchases and sales.
Boeing Stock briefly comes out
The giant Dow Jones Boeing (BA) rose 2.4% to 228.56. During the day, the shares reached 235.40, leaving the buying point with a cup with a handle 229.71 on a weekly chart. Shares of Citigroup rose 3% to 70.38, clearing a 69.52 basis point for buying, according to MarketSmith analysis. But Citi’s breakthrough comes weeks after Goldman Sachs (GS), JPMorgan Chase (JPM) and even Wales Fargo (WFC).
Avient stock jumped 5%, subtracting from the base of the cup in a huge volume. Flagstar shares rose 3%, rebounding from its 10-week line as it built the right side on its flat base. The FBC was the stock of the day for IBD on Wednesday. Avient stocks were on Tuesday.
Amazon, Zoom Video Break 200-day
Shares of Amazon, Zoom Video, Teladoc, Datadog and TWOU fell below their 200-day moving averages. Shares of AMZN fell 2.9%, while the other four fell 3.75% -9.5%. For shares of Zoom and Datadog, this was their first close below 200 days.
Amazon shares are one of a handful of trillion-dollar companies.
Zoom stock is probably the best game for the coronavirus, although Amazon and Teladoc have also thrived in the pandemic, along with cloud-based Datadog and 2U. As vaccinations increase and Covid restrictions ease, investors are betting that home-based companies will slow down.
Shares of Teladoc, Datadog and 2U reached new highs just a few weeks ago.
Shares of Tesla fell 4.8% to 653.20, the lowest close since Dec. 23, but above 619 last week. Shares of Roku fell 5.2%, Nvidia 4.5% and ServiceNow 6.1%.
Stock Market Rally “Mostly Dead”
Is this a forced rotation of the stock market outside growth or the beginning of a technological correction of the market? Looking closely at the Nasdaq and technology leaders, this seems like a stock market correction. But the Dow Jones and cyclical sectors performed well, while the S&P 500 is still above its 50-day line, barely.
The market rally may be “mostly dead” to quote Miracle Max from “Princess Bride”, but it’s still “slightly alive”. But where is Miracle Max to revive the rally? At this point, any other weakness is likely to push the “mostly dead” rally to “all dead.” On the other hand, it will take a long time to bring the rally back to market, like Princess Bride’s Wesley.
This is an important day to read the Big Picture to stay in line with the direction of the market and leading stocks and sectors.
One thing is for sure, growth, especially speculative growth, is not good. Stocks may return quickly or in a few weeks or months, while some may never return.
Don’t focus on 2020 winners like Zoom stock or Datadog if they are performing poorly now.
I am glad that last year we focused on last year’s leaders. This year, I think we need to focus on this year’s leaders. What do you think?
– JC Parets (@allstarcharts) March 3, 2021
Investors must take a defensive position, at least with technical names. If you lose stock, you are either out of sync with the market or the market itself is out of sync. Consider moving to larger reserves of mining, industry, agriculture and finance. But if the whole market turns upside down, the recent relative winners are likely to fall apart.
Cash is king in correction, and keeping much of it in the current market climate is a sensible choice.
Please follow Ed Carson on Twitter at @IBD_ECarson for stock market updates and more.
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