Dow Jones futures rose further late Thursday, while S&P 500 futures did not change much and Nasdaq futures fell as Treasury yields rose slightly. The stock market rebound had a strong session on Thursday, with the S&P 500 and Russell 2000 joining Dow Jones on new high ground. The Nasdaq compound led with a strong gain, but the volume was light.
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Shares of Arcelor Mittal and Regal Benoit (RBC) were among several “blue dots” on Thursday, while the shares of Microsoft, Google’s parent company Alphabet (Google Dynatrace (DT) flashed buy signals.
On Wednesday, the IBD declared that the bullish trend was resumed with the Dow closing at a new high and many stocks in the real economy bursting. The stock market rebound widened further on Thursday. Nasdaq made a strong move, resuming some important levels, although it did not qualify as a next day. Growth stocks have recovered.
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After closing, DocuSign (DOCU) and Ulta Beauty (ULTA) highlighted the main earnings reports. DOCU’s shares fell modestly late, despite strong results and guidelines. Ulta’s shares plummeted with a weak outlook and the departure of the CEO.
About that, Novavax (NVAX) reported a 96.4% efficacy rate versus the original coronavirus strain in the final analysis of a UK phase three study. NVAX’s shares increased overnight.
Stock in purchase zones
Global steel giant Arcelor Mittal (MT), power generator and engine manufacturer Regal Benoit, contracted electronics manufacturer Jabil Circuit (JBL), new shipping IPO Zim Integrated Shipping Services (ZIM) and Discover the Financial (DFS) broke out on Thursday.
MT shares and the rest have lines of relative strength at new highs, reflecting their superior performance in relation to the S&P 500 index. RS lines at new highs while they are still on a base or breaking is an especially high trend. Therefore, MarketSmith marks these stocks with a blue shaded dot at the end of the RS line.
About that, Dynatrace (DT) broke a bearish trend by issuing a buy signal. Microsoft (MSFT) recovered a point of purchase and went back to some other levels. Google’s shares issued some initial buy signals.
Shares of Arcelor Mittal, Regal Benoit, Discover and Google joined Microsoft on the IBD Leaderboard. Microsoft’s shares are in the IBD Long-Term Leaders. Google’s stock is on the IBD 50 list. RBC’s shares were the IBD shares of the day on Thursday.
Dow Jones Futures Today
Dow Jones futures were up 0.2% against fair value. The S&P 500’s futures were virtually stable. Nasdaq 100 futures lost 0.35%.
Treasury income increased slightly to 1.55% in expanded trade.
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.
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Coronavirus News
Coronavirus cases worldwide reached 119.10 million. Deaths from Covid-19 reached 2.64 million.
Coronavirus cases in the USA reached 29.21 million, with deaths above 543,000.
President Joe Biden said on Thursday that he will order states to make all adults eligible for the coronavirus vaccine by May 1.
Novavax said his Covid vaccine reported a 96.4% efficacy rate against the most common strain in a phase three trial. In a phase 2b clinical trial in South Africa, the Novavax vaccine had an efficacy rate of 55.4% in relation to HIV-negative participants, as the dominant B1.351 variant there proved to be more difficult to block among the various vaccines.
However, the Novavax vaccine was 100% effective in preventing serious illnesses, including all hospitalizations and deaths.
Novavax will not seek approval from the United States until data from a test in the United States is released, but this is also likely to show good results.
Novavax’s shares rose more than 20% overnight. NVAX’s stock soared from late January to early February with preliminary vaccine results, but returned almost everything before a recent jump.
On Thursday, new research showed more evidence that the Pfizer (PFE) and BioNTech The coronavirus vaccine (BNTX) is extremely effective.
Stock market rally
The stock market recovery has broadened, with more indexes at record highs, more stocks bursting and growing names continuing to recover from sharp sales. President Biden signed the $ 1.9 trillion spending bill on Thursday.
The Dow Jones Industrial Average rose 0.6% in Thursday’s stock market trading. The S&P 500 index gained 1% and the small cap Russell 2000 advanced 2.3%, both to record highs. The Nasdaq compound jumped 2.5%, resuming its exponential moving average of 21 days and the 50-day line.
Before Thursday’s opening, the 10-year Treasury’s yield fell to 1.48% and then rose to around 1.54%. Yield closed up 1 basis point at 1.53% after a 30-year Treasury auction. Yields fell on Wednesday after a 10-year Treasury auction.
Among the best ETFs, the Innovator IBD 50 ETF (FFTY) was up 4.5%, while the Innovator IBD Breakout Opportunities ETF (BOUT) was 4.75%. Both are recovering above their 50-day lines. The iShares Expanded Tech-Software Sector (IGV) ETF rose 3.1%, with Microsoft shares as its largest share. The VanEck Vectors Semiconductor (SMH) ETF advanced 4.2%.
Reflecting more speculative story stocks, Ark Innovation ETF jumped 6.2% and Ark Genomics ETF 5.6%.
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Blue Dot Specials
Arcelor Mittal’s shares rose 7.7% to 26.77, surpassing a point of purchase of 25.85 of a cup base in the heaviest volume since June 30. The relative strength line for MT shares is at a new high. This makes Mittal’s stock a special blue dot.
Regal Benoit’s shares rose 3.6% to 148.82, above 147.07 points of purchase of a cup base. The volume was the heaviest in years for RBC shares.
Zim Integrated Shipping’s shares soared 14.5% to 23.35, hitting a new high and clearing a 22.68 point of purchase from an IPO base. The volume was the heaviest since February 2, the fourth trading day for ZIM shares. ZIM’s IPO went public at 15 per share and quickly increased before taking a break, a strong move for a new issue. Zim is profitable with the strong growth of EPS in the last quarter. It is due to present its first earnings report as a public company on March 22.
Discover Financial’s shares rose 2.7% to 102.27, above a 101.06 point of purchase. The volume was below average for DFS shares, continuing a trend.
Jabil Circuit’s shares jumped 5.25% to 47.71, freeing a 42.28 point buy from a flat base in above-average trades. This follows a strong upward trend in JBL shares from early November to mid-January. Note that Jabil’s earnings expire next Tuesday, so there is not much room for JBL shares to gain much space.
The IBD stock of the day prevails in the buying zone amid faster growth
Technology stocks flashing buy signals
Dynatrace shares jumped 5.9% to 54.11, breaking a downward trend starting with its peak on February 9, 56.77. With market correction, DT’s shares fell slightly to their former base, but found support in their 50-day line and recovered quickly. This is much better than most growth software names. Investors may take a small position now, perhaps using a close below Wednesday’s low of 50.46 as a sell signal.
Microsoft shares rose 2% to 237.13, resuming once again its 232.96 point of purchase and its 21-day line. MSFT’s shares are just 2.2% above its 10-week line, offering a possible entry as a Long-Term Leader. Microsoft’s shares may be forming a new base with a potential entry of 246.23. Remember that the RS to MSFT line took several months. But, he has remained better than most coaches in recent weeks.
Google shares rose 3.2% to 2,100.54, rebounding again from its 21-day line. GOOGL shares have a tight entry of 2,145.24 in three weeks. Investors can make an early entry here, with Google’s stock closing above any previous weekly close. In addition, the RS line is just below last week’s record.
Bullish stock market analysis
On Wednesday, the Dow Jones hit a new high. That day’s price and share movement was strong enough to be the next day, but the IBD decided that the Dow Jones had never fallen enough to be considered a correction. Therefore, the direction of the market has changed to “Resume the upward trend”, with a strong trend for real economy stocks.
So the question facing Thursday was how the split market would behave. Would the Nasdaq enter the uptrend or pull the broader market down again?
On Thursday, the Dow Jones moved further into new high ground, while the S&P 500 and Russell 2000 also rose.
The Nasdaq compound rose sharply above key levels. But Nasdaq’s volume fell slightly from Wednesday. Therefore, Thursday did not qualify as a next day to confirm the Nasdaq market’s recovery.
The increase in Treasury yields has put pressure on growing stocks and has been a major catalyst for liquidation in recent weeks. If the 10-year Treasury yield can remain in its recent range of 1.4% -1.6%, markets can take it easy. A more gradual increase towards 2% may also not trigger sales.
What investors should do now
With the market back in an uptrend, investors should look to increase exposure. Look for stocks that are bursting or sending other bullish signals. Most of them will be names of the real economy, with the exception of the shares of Dynatrace, Microsoft and Google.
Most growth stocks need significant repairs. Yes, if you buy these names as they recover and keep running, you will see huge gains. But if the Nasdaq reverses, the sale could be just as violent. The goal is not to buy at the lowest possible price, but at a price where your chances of success are greater.
Investors can also buy ETFs, such as SPY or a wide range of ETFs. More aggressive traders can enter QQQ or a growth ETF, such as IGV, SMH or FFTY, as a way to play a growth spike with few individual names in position.
Don’t feel compelled to step on the gas, especially in this unusual split market. You may want to save some powder for growth actions if and when those names become actionable again. In addition, if Nasdaq resumes heavy sales, the broader market will come under pressure.
Let the stock market pull you in. If the rally gains momentum and more stocks burst, you will gradually increase your exposure.
Follow Ed Carson on Twitter at @IBD_ECarson for stock market updates and more.
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