Dow Jones futures fell modestly on Wednesday, along with those for the S&P 500 and Nasdaq. The Dow Jones sank modestly on Wednesday, while the Nasdaq fell to new lows, but the stock market recovery is not yet “entirely dead”.
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For real economy stocks, Wednesday was normal or even positive. Boeing (BA), Citigroup (Ç), Flagstar Bancorp (FBC) and Avient (AVNT) found points of purchase or initial entries.
Liquidation of growth stocks continued with Nasdaq reducing its February 23 intraday low. Games to stay at home Amazon.com (AMZN), Zoom Video (ZM), Teladoc Health (TDOC), Datadog (DDOG) and 2U Inc. (TWOU) all broke below long-term support. Tesla (TSLA) retreated to a 2021 closing low while Nvidia (NVDA), Roku (ROKU) and Service now (NOW) has dropped decisively below its 10-week lines.
Marvell Technology (MRVL), Snowflake (SNOW), Okta (OKTA) and Splunk (SPLK) presented the gains on Wednesday. But all of those tech stocks were falling or breaking in quarterly results, dropping dramatically on Wednesday.
Marvell’s earnings were in line and the guidelines were mixed. Snowflake reported strong revenue growth, while Okta and Splunk outperformed views. Okta’s shares plunged overnight in a $ 6.5 billion acquisition. Marvell fell sharply, while SNOW’s shares rose slightly. Splunk’s shares, which are at their 10-month low, have risen solidly.
Tesla and Nvidia’s shares are on the IBD Leaderboard. ServiceNow’s inventory is on IBD’s list of long-term leaders. Tesla and Nvidia’s shares are in the IBD 50.
Dow Jones Futures Today
Dow Jones futures fell 0.3% against fair value. S&P 500 futures fell 0.4% and Nasdaq 100 futures fell 0.6%.
Keep in mind 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 115.76 million. Deaths from Covid-19 reached 2.57 million.
Coronavirus cases in the US reached 29.45 million, with deaths above 531,000.
Stock market rally on Wednesday
The stock market recovery was sold, closing at session lows. The names of the real economy held up while the tech giants retreated and speculative names were sold.
The Dow Jones Industrial Average fell 0.4% in Wednesday’s stock market trading after having been slightly positive for most of the session. Boeing’s shares were the main winners of the Dow, but Apple (AAPL) and Microsoft (MSFT) weighed in on the blue chips. The S&P 500 index plunged 1.3%, back below its 21-day line, but holding just over 50 days. The Nasdaq compound fell 2.7%, cutting its 50-day line and reducing its February 23 low.
The 10-year Treasury yield rose 6 basis points to 1.47% after falling in the past few days. The strong upward trend in long-term sovereign bond yields has put pressure on the recovery of the stock market, especially speculative growth.
Among the best ETFs, the Innovator IBD 50 ETF (FFTY) fell 3.5%, while the Innovator IBD Breakout Opportunities ETF (BOUT) fell 3.25%. IShares Expanded Tech-Software Sector ETF (IGV) decreased 4.1%, with Zoom Video and NOW with notable components. The VanEck Vectors Semiconductor (SMH) ETF lost 3.15%. NVDA’s shares are one of SMH’s main stakes.
Reflecting more speculative story stocks, Ark Innovation ETF (ARKK) fell 5.9% and Ark Genomic Revolution ETF (ARKG) 6.3%. Both reduced recent casualties, with ARKK closing below them.
Tesla is Ark Investment’s largest ETF holding company, including ARKK. Teladoc and Roku shares are also among Ark’s top five shares, while Ark bought many shares of Zoom on Tuesday. Ark also holds considerable stakes in many smaller, less liquid names. It will be difficult to get out of them, especially with Ark Invest disclosing much of its daily purchases and sales.
Boeing shares open soon
Giant Dow Jones Boeing (BA) rose 2.4% to 228.56. In the intraday, the shares reached 235.40, leaving a point of purchase of 229.71 cup with handle on a weekly chart. Citigroup’s shares rose 3% to 70.38, freeing up a basic point of purchase of 69.52 cups, according to MarketSmith’s analysis. But the Citi explosion comes weeks after Goldman Sachs (GS), JPMorgan Chase (JPM) and even Wells Fargo (WFC).
Avient’s stock has burst by 5%, coming out of a cup base in large volume. Flagstar’s shares were up 3%, recovering optimistically in its 10-week line as it builds the right side of its flat base. FBC was the stock of IBD’s day on Wednesday. Avient shares were Tuesday.
Amazon, Zoom Video Break 200 days
Shares in Amazon, Zoom Video, Teladoc, Datadog and TWOU fell below their 200-day moving averages. AMZN’s shares fell 2.9%, while the other four fell 3.75% -9.5%. For Zoom and Datadog shares, they were the first closings below 200 days.
Amazon’s shares are just one of a handful of trillion-dollar companies.
Zoom stock is perhaps the best coronavirus game, although Amazon and Teladoc also thrived in the pandemic, along with cloud-based Datadog and 2U. As vaccinations increase and Covid’s restrictions decrease, investors are betting that richly valued domestic companies will see slower growth.
The shares of Teladoc, Datadog and 2U reached new highs just a few weeks ago.
Tesla’s shares fell 4.8% to 653.20, the lowest close since December 23, but above last week’s intraday low of 619. Roku’s shares fell 5.2%, Nvidia’s 4.5% and ServiceNow 6.1%.
Stock market rally ‘Almost dead’
Is this a violent rotation of the stock market out of growth or the beginning of a technology-led market correction? Looking strictly at Nasdaq and technology leaders, this looks like a stock market correction. But the Dow Jones and cyclical sectors held up well, while the S&P 500 index is still above its 50-day line only.
The market rally may be “almost dead”, to quote Miracle Max from “Princess Bride”, but it is still “slightly alive”. But where is Miracle Max to relive the rally? At that point, any weaknesses most likely would push the “almost dead” rally to “all the dead”. On the other hand, it would take a long time to bring the market rally fully back to life, much like the Princess Bride’s Wesley.
This is an important day to read The Big Picture and stay in sync with the direction of the market and the main stocks and sectors.
One thing is certain, growth, especially speculative growth, is in disuse. Stocks can recover quickly or several weeks or months from now, while some may never recover.
Do not focus on the 2020 winners, like Zoom or Datadog shares, if they are performing poorly right now.
I’m happy to focus on last year’s leaders. This year, I think we should focus on this year’s leaders. What do you think?
– JC Parets (@allstarcharts) March 3, 2021
Investors must take a defensive stance, at least with technology names. If your stocks are losing, you are either out of sync with the market or the market itself is out of sync. Consider moving more to mining, industrial, agricultural and financial stocks. But if the entire market evolves decisively, the recent relative winners are also likely to collapse.
Money is king in a correction, and keeping a large amount of it in today’s market climate is a wise choice.
Follow Ed Carson on Twitter at @IBD_ECarson for stock market updates and more.
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