Dow Jones futures rose modestly Monday night, along with S&P 500 futures and Nasdaq futures. The coronavirus stock market rally suffered an ugly reversal Monday as California rolled back reopening measures. Leading stocks such as Tesla (TSLA), Shopify (SHOP) and Fastly (FSLY) also plunged from intraday highs. FANG stocks Amazon.com (AMZN) and Netflix (NFLX) also sold off today. And like you said, we could see a trip down to the 21-day.
Meanwhile, JPMorgan Chase (JPM) kicks off bank earnings reports Tuesday morning, along with Citigroup (C) and Wells Fargo (WFC). None of those are leaders, but financials make up a big part of the Dow Jones, and S&P 500 index. The results, guidance and commentary may offer insight into the nascent economic recovery.
The coronavirus stock market rally started off powerfully, fueled by Covid-19 vaccine hopes. Tesla stock, Amazon stock and Netflix stock were big early winners. The Nasdaq pared gains as a top Fed official said "we will need to get back to more unaided market function" by reducing central bank intervention, though he stressed that time is not now. But the real selling came after California reimposed many coronavirus lockdown orders and Los Angeles said schools won't reopen in the fall, big blows to economic recovery hopes.
Tesla stock closed down just 3.1%, but after spiking 14% intraday. Fastly stock tumbled 12% on Monday, while Shopify stock lost 6%. Investors who bought these three big winners correctly would still be up sharply. But anyone buying at today's highs would be sitting on significant losses.
Amazon stock and Netflix stock erased strong morning gains to lose 3% and 4.2%, respectively.
JPMorgan stock climbed 1.4% on Thursday while Citigroup stock and Wells Fargo stock edged lower.
In late trading, Tesla stock initially fell, but turned 2% higher as Piper Sandler set a new price target of 2,322. Netflix stock climbed 2.5%.
Investors should be taking a more defensive approach. Take a careful look at your stocks and portfolios. Set up a game plan.
NFLX stock, SHOP stock, TSLA stock and AMZN stock are all on IBD Leaderboard. Netflix stock is on the IBD 50.
Dow Jones Futures Today
Dow Jones futures rose 0.% vs. fair value. S&P 500 futures advanced 0.2%. Nasdaq 100 futures popped 0.3%, boosted by Netflix stock and Tesla stock. Remember that overnight action in Dow futures and elsewhere doesn't necessarily translate into actual trading in the next regular stock market session.
JPMorgan earnings will likely swing DJIA futures, with JPM stock, Citi and Wells all S&P 500 members as well.
Coronavirus News
Coronavirus cases worldwide are at 13.22 million. Covid-19 deaths have reached 574,000.
Coronavirus cases in the U.S. are above 3.47 million, with deaths over 138,000.
California ordered indoor restaurant seating, movie theaters and museums closed statewide. Many of these operations already were closed in key areas such as Los Angeles County. The Los Angeles and San Diego school districts will not reopen classrooms in the fall.
Pfizer (PFE) and BioNTech (BNTX) got FDA fast-track designation for two coronavirus vaccine candidates. Early data from the German trial of one of the mRNA-based vaccine candidates, BNT162b1, is expected later this month. Dow Jones giant Pfizer and German biotech BioNTech rose strongly.
Clearly, hopes for coronavirus vaccines in the coming months are helping support the stock market rally, including Monday's solid gains.
Coronavirus Stock Market Rally
The coronavirus stock market rally started off strong and ended with furious selling. The Dow Jones Industrial Average eked out a tiny gain in Monday's stock market trading, helped by Pfizer stock and JPMorgan stock. The S&P 500 index lost 0.9%. The Nasdaq composite, which had run up to yet another all-time high intraday, fell 2.1%.
Among the best ETFs, the Innovator IBD 50 ETF (FFTY) skidded 3.8%. The iShares Expanded Tech-Software Sector ETF (IGV) retreated 4.3%, as software stocks showed some selling even when the market was at intraday highs. The VanEck Vectors Semiconductor ETF (SMH) lost 1.4%. The Analog Devices (ADI) takeover deal for Maxim Integrated (MXIM) helped buoy chip names.
Nasdaq Pullbacks On A Schedule?
Since the coronavirus stock market rally follow-through days in early April, the Nasdaq composite has had a number of short-lived pullbacks — sometimes lasting less than a day — every couple of weeks. So, arguably the coronavirus stock market rally is due for at least a momentary pause. Monday's action by itself doesn't really measure up to those prior pullbacks, because the Nasdaq didn't undercut prior days or even approach its 21-day exponential moving average. The 21-day line has been an area of support during the coronavirus stock market rally. At Monday's close, the index is still 2.6% above that key level.
Of course, the Nasdaq could simply march to new high ground. The upside might be capped with the tech-heavy index butting up against the top of its steep channel lines in the coronavirus stock market rally, and its long-term channel lines going back to 2009.
Conversely, the Nasdaq could break through the 21-day and target the 50-day line.
What Investors Should Do Now
After Monday's stock market reversal, investors should adopt a more cautious mindset. Given that the Nasdaq still has room to fall to its 21-day and especially its 50-day line, consider the impact that would have on your stocks and your portfolio.
Many of the stock market rally's biggest winners were major losers Monday, which is not unusual. If the Nasdaq falls 3%, 5%, or 10% from here, many leaders, from Amazon stock to Tesla stock, could tumble far more. Which stocks do you think are your true "A" names that you want to hold, and which are lower quality and should be sold? Are you too exposed to one sector — such as software? Or is your overall portfolio perhaps too much on margin?
Once you've analyzed your holdings, make up a game plan. Draw, or redraw, lines in the sand for the stock market rally and your holdings. Do that when the market isn't trading, so you can keep your emotions out. When the bullets are flying, just stick to your rules and execute your game plan.
Will you sometimes get stopped out of stocks that quickly rebound? Of course. But you'll also avoid seeing big winners turn into paltry gains, and small declines turn into major losses. If you have sound rules, you'll be better off for following them.
Stay engaged and remain flexible. Be ready to turn more bullish or bearish as conditions warrant. Read The Big Picture every day to stay in sync with the market direction and leading stocks and sectors. #DOW##StockMarket##StockSurge#
Reprinted from Yahoofinance，the copyright all reserved by the original author.
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