The stock reduced initial losses on Friday, with the Dow showing some initial resilience as earnings news fueled some dramatic initial moves. PayPal has jumped in management’s comments. Vocera prepared for a possible recovery of support. Canadian GreenPower spiked an EV deal with a Warren Buffett company. Disney shares fell on the Dow Jones today, despite reporting that the subscriber base for its Disney + service was approaching the 100 million mark.
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The Dow advanced slightly upward, then fell to 0.1%. The S&P 500 fell less than 0.1%. Nasdaq Composite reduced its initial drop to 0.2% in the stock market today, with FANG shares trading low and DexCom (DXCM) fell to the bottom of the Nasdaq 100 after a loss of earnings.
Illumina (ILMN) rose ahead of the Nasdaq 100, up more than 10% after fourth quarter earnings and revenues hit Thursday night. IBD Leaderboard Stock PayPal Holdings (PYPL) was up 3% as at least nine analysts raised their price targets after positive comments from management on Thursday.
Mobile communications game You (VCRA) staged a strong 10-week support recovery, a 10% increase after its fourth quarter report on Thursday. Biotechnology Immunogen (IMGN) jumped 17% more in earnings.
New IPO Bumble (BMBL) rose 5.7%, after rising more than 63% on its first trading day on Thursday. Aurora Cannabis (ACB) fell 5.1%, despite reporting results for the second fiscal quarter above the forecast on Thursday.
Dow Jones today: Disney earnings
Walt Disney (DIS) spilled its pre-market gain and fell 1.5% at Dow Jones today, after reporting solid fiscal performance in the first quarter. Disney + subscribers rose to 94.9 million on January 2, an increase of 9% over 86.8 million on December 2 and 258% over the previous year. The monthly fee for U.S. subscribers is expected to increase from $ 1 to $ 7.99 per month in March.
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Video streaming helped offset part of the losses at theme parks and cinemas closed by the coronavirus pandemic. Disney’s revenue fell for three consecutive quarters. Gains have already fallen for nine consecutive quarters and for two consecutive years.
Meanwhile, Disney shares closed a buying point of $ 183.50 on a flat basis on Monday. The shares ended on Thursday still in a buying range of 192.68.
Earnings news: Hubspot, GreenPower
HubSpot (HUBS) popped 17% higher, moving out of a buying range after overcoming a cup-based buying point on Monday. The CRM software developer reported earnings and revenue in the fourth quarter well above analysts’ expectations and increased guidance for the first quarter. If the pre-market movement continues during the opening, the stock will be extended beyond its buying range and will have triggered the eight week waiting rule.
Raymond James and Mizuho updated the stock. Piper Sandler increased its target price from 488 to 600. HubSpot was featured in IBD’s New Highs segment on Monday.
Based in British Columbia GreenPower Motor (GP) recovered 6.4% in the first shares. The commercial bus electric bus manufacturer released fiscal results for the third quarter and also announced an agreement to sell 150 taxis and chassis to Forest River RV, a unit of Warren Buffett’s Berkshire Hathaway (BRKB).
The units, due for delivery in the first quarter, will form the basis of a line of Forest River electric buses and commercial vehicles, the companies said.
GreenPower’s shares ended Thursday with a 44% increase compared to the end of the first day of public trading in August.
Other actions brought on included earnings 2U (TWOU), Cognex (CGNX), Vocera and J2 Global (JCOM). American axis and manufacturing (AXL) was up 6.6% after its Friday morning report.
PayPal shoots to 750 million users
PayPal held its annual investor day – virtually, of course – on Thursday. Chief Executive Dan Schulman said the company could have 750 million active accounts by 2025, up from 377 million at the end of the fourth quarter. Factors like installment payment and in-store payment options, and cryptocurrency trading, are driving trends in increased engagement, and as a result, the CEO said, the company was seeing “historic engagement curves starting to double and accelerate.”
The IBD 50 and Leaderboard stock increased on February 4, following the fourth quarter earnings report. The shares were extended, about 32% above the December break.
Dow Jones Today: Chasing Small Caps, Growth Shares
The Dow Jones is headed for the starting bell today, up 0.9% for the week and reaching new highs. The S&P 500 has a gain of 0.8%. The Nasdaq rose 1.2%, despite a modest loss on Thursday. The Nasdaq and S&P 500 are also at new highs.
Small-cap and growth stocks outperformed by a large margin. Both Russell 2000 and Innovator IBD 50 ETF (FFTY) gained 4.2% through Thursday. The number of target breaches may be decreasing, but the breaches themselves are generally holding up well, and the earnings season’s action has been largely positive.
For a more detailed analysis of the current stock market and its status, study the big picture.
But it is important to note that Russell now trades more than 38% above its 200-day moving average – the highest levels in the index’s history. Russell peaked at 32% above its 200-day line, 15.2% above its 50-day line, on March 10, 2000, as it rolled into the dot-com bust.
Nasdaq was 17% above its 50-day line at that point. So while Russell looks a little overheated, Nasdaq’s current 7.5% margin above its 50 days seems harmless in comparison. Still, for Nasdaq, margins of more than 6% over 50 days tend to signal retracements, or at least periods of stable trade that allow moving averages to recover.
This and a series of other caution flags hanging over the market’s “confirmed upward trend” status give investors good reasons to remain cautious and alert.
Tracking the energy / transportation paradigm shift
Paradigm change is always a dangerous term. As soon as investors start to buy a new or reconfigured horizon for US or global economies, new paradigms tend to collapse or disappear, and markets return to the status quo.
However, the stock market and the US and global economies have seen a surprising number of paradigm shifts since the turn of the century. The emphatic rise of the Chinese economy, smartphones, shale oil and natural gas and social media are just a few examples of massive industrial / economic changes in the past 20 years.
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Now, the stock market appears to be reflecting yet another major revolution, as the energy and transportation markets enter a post-fossil fuel era. Solar, autonomous electric vehicles, battery storage, fuel cells, hydrogen and other technologies are all, for the first time, reaching competitive levels of cost-effectiveness and efficiency. The world’s largest investors and funds recognize this and are driving a tectonic shift in global capital.
Reflecting the value of such a change is hard work and unfamiliar territory for the stock market. And now this, at least in part, seems to be generating the kind of unusual and extended graphical behavior that we see with Nasdaq and Russell 2000.
Find Alan R. Elliott on Twitter @IBD_Aelliott
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