The Dow Jones futures fell slightly on Thursday night, along with the S&P 500 and Nasdaq futures. The stock market rebound suffered heavy losses on Thursday, with 10-year Treasury yields continuing to rise. This time, Nasdaq did not recover from casualties, closing below the key support.
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Nvidia (NVDA) and Teladoc Health (TDOC) joined shares with considerable return earnings, while Tesla (TSLA) fell further below its 10-week line. Investors should be playing defense, especially with technology stocks. For those who are waiting to see how the big winners hold on at the end of the week, some important selling or suspension decisions are coming.
About that, GameStop (GME) came out well from its intraday maxim. GME’s shares rose 19% to 108.73, after doubling on Wednesday. But it came out of its 184.68 intraday high. AMC Entertainment (AMC) and Express (EXPR), two other squeeze play that jumped on Thursday morning, closed. GME’s shares fell overnight in active trading.
Top Earnings Reports
Zscaler (ZS), Etsy (ETSY), Salesforce.com (CRM), Autodesk (ADSK), Farfetch (FTCH), Airbnb (ABNB) and Doordash (DASH) has published a series of earnings reports after closing.
Etsy, Zscaler, Salesforce, Autodesk and Farfetch outperform earnings views. Airbnb and DoorDash reported huge quarterly losses in their first quarterly reports since their IPOs in late 2020, but have outpaced revenues.
Etsy’s stock jumped at the end of the trade, recovering the 5.5% drop on Thursday. Zscaler’s stock rose, recovering most of its 5.8% loss in the regular session. Salesforce’s stock retreated overnight with weak guidance after the CRM closed at 3.9%. Farfetch’s shares also fell in expanded trade, extending the 4.15% drop on Thursday. ADSK’s shares fell after a 5% drop.
ABNB’s shares rose slightly overnight, after falling 9.1% on Thursday. DASH shares were sold after closing with a 5.4% drop.
DraftKings (DKNG) reports on Friday.
Investors have been less tolerant of earnings results in the current market climate, even when earnings and projections seem strong. Nvidia’s shares fell 8.2% on Thursday after the gains. Teladoc, Innovative Industrial Properties (IIPR), Proginia (PGNY), NetApp (NTAP) and Novocura (NVCR) all suffered double-digit losses.
Tesla and Nvidia’s shares are on the IBD Leaderboard. The CRM inventory is at IBD Long-Term Leaders. Tesla and Etsy’s shares are in the IBD 50.
Dow Jones Futures Today
Dow Jones futures fell 0.2% against fair value. S&P 500 futures lost 0.2%. Nasdaq 100 futures declined 0.3%.
Remember that overnight action on Dow futures and elsewhere does not necessarily translate into real trading in the next regular stock market session.
Join IBD experts as they analyze actionable stocks at the stock market’s high on IBD Live.
Coronavirus News
Coronavirus cases worldwide reached 113.50 million. Deaths from Covid-19 reached 2.51 million.
Coronavirus cases in the USA reached 29.04 million, with deaths above 520,000.
Stock market rally
The stock market recovery suffered widespread losses on Thursday, with growth continuing to lead the downside.
The Dow Jones Industrial Average fell 1.75% in Thursday’s stock market trading, a day after reaching a record high. The S&P 500 fell 2.45%, but found support on the 50-day line. The Nasdaq compound plunged 3.5%, closing below its 50-day line for the first time since November 3. It is still above Tuesday’s intraday low.
The 10-year Treasury yield jumped 14 basis points to 1.52%. This increase in yield is putting pressure on growth stocks.
Nvidia reported strong gains and guidance, but fell 8.2% to 532.30. This is more than a 10% gain from the 560.07 purchase point of 560.07 and is now below the 50 day line. Teladoc’s shares plunged 14% to 219.55. This eliminated a 30% run from a 236.76 identifier entry and is now 7.3% below the point of purchase. TDOC’s inventory is also well below its 50-day line.
Among the best ETFs, Innovator IBD 50 ETF (FFTY) fell 4.4%, while Innovator IBD Breakout Opportunities ETF (BOUT) fell 5.5%. The iShares Expanded Tech-Software Sector (IGV) ETF fell 3.9%. VanEck Vectors Semiconductor ETF (SMH) fell 5.6%, with Nvidia’s shares as a major.
Reflecting more speculative story stocks, Ark Innovation ETF sank 6.4% and Ark Genomics ETF 5.8%. ARK Invest’s biggest share is Tesla’s shares, valuing the EV maker earlier in the week. TDOC’s shares are another of the top five stakes.
With ARK Invest starting to see withdrawals, its release from daily purchases and sales may make it difficult to exit positions, especially in less liquid names.
Market Rally Analysis
Whether we are in a broad market retreat or in a strong sector rotation, growing stocks are staggering. The Nasdaq compound reached resistance at the 21-day exponential moving average and is now below 50 days. The high-tech index fell 5.4% this week, after falling 1.6% last week.
Perhaps this is the moment when the rise in the stock market regains its balance. But the current trend is not your friend. Furthermore, even if the market starts to rise, that does not mean that the names of speculative growth from last year will lead or even advance. The cyclical and financial sectors have done well this week and may continue to lead.
The Dow Jones fell just 0.3% in the week and only fell because of technology titans Apple (AAPL) and Microsoft (MSFT).
Weekly sale signs
Investors should always sell a stock if it falls 7% -8% below the purchase price and should not allow a double-digit gain to turn into a loss, as with Nvidia and Teladoc.
But selling winning stocks is an art and a science. One way to try to minimize the sales panic is to wait and see how a stock ends in the week before the sale or the close of a position. If a stock is decisively below its 10-week line – 2% or more – this could be a sell signal. (Sometimes a stock will have support areas slightly below the 10-week line, so investors can expect a break in those levels as well.)
But if a stock is decidedly below that support, do you sell? Much of it comes down to your cost base. If you are seeing a 30% gain reduced to less than 10%, you may want to leave while you still have a gain. If it is still 100% higher, you will have more leeway. Your conviction is also fundamental. If you believe that a stock has the potential to make big gains over current levels, you may want to preserve most of that position. If you are not convinced, you can exchange your chips.
Tesla’s shares are 13% below its 10-week line, dropping sharply this week in high volume. That would be a sell signal, but not automatic.
If you bought at the 466 buy point in November, you saw a 93% gain cut in half to 46% still robust. You probably wouldn’t want to see much of that gain evaporate. If you bought about 290 or 174, holding Tesla shares would be even easier to justify. But selling a lot or all of your Tesla shares would also be understandable.
Sell prepayment
As the Nasdaq was extended in January and February, the IBD suggested selling hard and reducing exposure by several setbacks. The aim was to guarantee some profits and preserve capital when market conditions and individual stock action became a little dangerous.
In the short term, stocks may have continued to rise. But on Thursday, Nasdaq closed on where it was on 13 January. The FFTY ETF is back where it was on January 14, while ARKK is at pre-Christmas levels. Generally speaking, if you made profits from mid-January to early February, you are in a better position today.
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