Dow Jones futures were little changed late Tuesday, along with S&P 500 futures and Nasdaq futures. The stock market rally continued its recent run Tuesday, with the Nasdaq topping the 15,000 level for the first time.
Shopify (SHOP), Palo Alto Networks (PANW), CrowdStrike (CRWD), Airbnb (ABNB), Facebook (FB), Mercado Libre (MELI) and Roblox (RBLX) among those flashing buy signals. Meanwhile, “traditional” meme stocks GameStop (GME) and AMC Entertainment (AMC) spiked higher.
The S&P 500 and Nasdaq hit fresh all-time highs, while the Dow Jones nudged higher and the Russell 2000 moved toward a key level. A “risk on” mentality has taken hold since the major indexes hit intraday lows Thursday, testing key levels. There are some tentative signs that Covid cases may be leveling off, giving a boost to ABNB stock and other travel plays.
Palo Alto earnings and guidance not only triggered a PANW stock gap-up breakout, but it fueled other software security. CRWD stock also jumped on news that it will join the Nasdaq 100.
SHOP stock popped as the e-commerce software giant announced a new tie-up with TikTok. Shopify already works with Facebook, which also is flashing an aggressive entry.
While still well off record levels, AMC stock and GME stock blasted above their 50-day lines, rising 20% and 27.5%, respectively. These were arguably early entries on a technical basis. But both already looked extended from their 50-day lines, while still having overhead resistance. Meme stocks are prone to big moves up — and down.
The video embedded in this article highlights SHOP stock, Airbnb and ZIM Integrated Shipping (ZIM), along with broader market rally analysis.
Dow Jones Futures Today
Dow Jones futures were just above fair value. S&P 500 futures and Nasdaq 100 futures were little changed.
Coronavirus cases worldwide reached 213.83 million. Covid-19 deaths topped 4.46 million.
Coronavirus cases in the U.S. have hit 38.89 million, with deaths above 647,000.
There are signs that U.S. cases may be starting to peak. Some Southern states with low vaccination rates are seeing a decline in new cases. Vaccinations have ramped up again in the U.S., especially in the South. Together with pre-existing vaccinations and infections as well as growing business and government restrictions, and the tide could be close to turning.
Stock Market Rally
The stock market rally had a modest advance on the major indexes, while leading stocks outperformed.
The Dow Jones Industrial Average edged up 0.1% in Tuesday’s stock market trading. The S&P 500 index climbed 0.15%. The Nasdaq composite rose 0.5%. The small-cap Russell 2000 rallied 1%.
The iShares Expanded Tech-Software Sector ETF (IGV) advanced 0.7% even as key holding Microsoft (MSFT) dipped from record highs. Palo Alto and CRWD stock are IGV components. The VanEck Vectors Semiconductor ETF (SMH) edged up 0.1% after jumping 2.9% Monday on big moves from Nvidia (NVDA), AMD (AMD) and ASML (ASML).
SPDR S&P Metals & Mining ETF (XME) gained 2% and Global X U.S. Infrastructure Development ETF (PAVE) 0.8%. U.S. Global Jets ETF (JETS) leapt 3.1%. SPDR S&P Homebuilders ETF (XHB) climbed 1.4%. The Energy Select SPDR ETF (XLE) rallied 1.7% and the Financial Select SPDR ETF (XLF) rose 0.6%
Reflecting more-speculative story stocks, ARK Innovation ETF (ARKK) closed up 1.3% and ARK Genomics ETF (ARKG) 1.5%. ARKK is closing in on its 50-day and 200-day lines, but ARKG still has some distance from those key levels
SHOP stock climbed 3.85% to 1538.51, rebounding from its 50-day and 21-day lines and reclaiming a prior 1,499.85 buy point. Shares also broke a short downtrend. Shopify reached a TikTok deal, as “social commerce” continues to boom.
SHOP stock hit record highs in late June, then moved sideways in choppy fashion for several weeks, flashing various buy signals that quickly fizzled. It drifted below its buy point and 50-day line last week.
Shopify stock is on track to have a flat base with a 1,650.10 buy point after this week.
Palo Alto Stock
Palo Alto earnings and guidance were much better than expected Monday night, fueling strong share gains Tuesday. PANW stock gapped up 19% to 441.87 in massive volume, blasting past a consolidation going back six months.
Palo Alto stock is still within range of its 5-minute high after Tuesday’s open, so it’s buyable. However, earnings gap ups haven’t worked especially well in the choppy market rally. Investors may want to see if PANW stock pulls back or consolidates for a time, then buy on a new bullish signal.
CrowdStrike stock jumped 8.1% to 265.63, gapping above its 50-day line and breaking a downtrend. CrowdStrike rallied on Palo Alto earnings but primarily on being added to the Nasdaq 100 index before Thursday’s open.
CRWD stock cleared a record high on June 22. Then, much like Shopify stock, was up and down for several weeks. After hitting a record 272.63 on July 23, shares retreated, undercutting their 50-day line on Aug. 11 and then trending lower for several more sessions.
CRWD stock now has a short consolidation. If it can hold in its current range, it would have a short cup base after this week with a 272.73 buy point.
Keep in mind that CrowdStrike earnings are due on Aug. 31.
Airbnb stock leapt 10% to 161.42, vaulting from its 50-day line and breaking out of a bottoming base, a cup-with-handle with a 152.86 buy point. ABNB stock is now slightly extended from the buy zone, which runs to 160.50.
ABNB stock benefitted from renewed strength in highly valued growth names. But travel stocks generally, from Marriott (MAR) to Southwest Airlines (LUV), are rebounding in the past several days, as the delta variant wave of new Covid cases appears to be peaking.
Facebook stock edged up 0.6% to 365.51, continuing to rebound from its Thursday’s intraday test of the 50-day and 10-week lines. At 2.8% above the 10-week line, FB stock is in range. Shares also have cleared a short downtrend. Investors also could use 366.95 as a short-term resistance level. At the end of this week, FB stock could have a flat base with a 377.65 buy point.
Mercado Libre Stock
MELI stock rose 2.5% to 1,855.29, breaking the downtrend of a handle, offering an early entry. Mercado Libre stock has an official cup-with-handle buy point of 1,899.43, according to MarketSmith.
Blowout Mercado Libre earnings spurred a 14% gain on Aug. 5, offering an initial aggressive entry. The handle began to form a few days later.
RBLX stock jumped 4.9% to 89.26, clearing short-term resistance and breaking the downtrend in a messy consolidation. Investors could use 87.62 as an early entry in a deep consolidation. The official buy point is all the way at 103.97. The video game software platform continues to have big daily and weekly swings following its IPO in March.
Market Rally Analysis
There’s nothing like a few positive sessions to transform the health of the stock market and individual portfolios. The stock market rally continued its rebound from Thursday intraday lows, when the Dow and S&P 500 rebounded from the 50-day line and the Nasdaq began to reclaim that key level. The S&P 500 and Nasdaq are at record highs while the Dow Jones is close. The Russell 2000 is still below its 50-day line, but is testing that key level again.
Growth stocks are leading new buy signals, with Shopify, Airbnb and Facebook among those.
While growth stocks flashed buy signals, market leadership has been shoring up after weakening dramatically during last week. Shipping stocks are breaking out. Steel stocks rebounded solidly for a second straight session. Financials rose modestly again, many still in buy zones. Industrials are nudging higher again with housing stocks bouncing, with some reclaiming or nearing buy zones.
Market breadth is improving, albeit from 2021 lows.
What To Do Now
The past few days have certainly offered new buying opportunities, especially for investors who took profits or cut losses in the prior two weeks. Hopefully, this latest upswing will continue for some time, letting recent buys work and creating other entries.
Keep updating your watch lists, and don’t just look at growth stocks. While software and especially security software names have surged higher in the past couple of days, don’t get too concentrated in a particular group or sector.
While investors can play meme stocks, such as AMC stock or GME stock, the risks are very higher. Meanwhile, many leading stocks with booming growth have raced higher from proper entries. Even if unprofitable, like ABNB stock, traditional growth stocks offer at least a plausible story toward long-term guys.
Don’t buy extended. It can be hard to watch stocks blasting beyond a buy zone and keep running, but buying extended raises the risk of a pullback that shakes you out or sucks you into much-bigger losses.
That’s especially true in the choppy market rally over the past several months.
Because it’s been a choppy market rally, with significant and frequent sector rotation, don’t get locked into a bullish or bearish mindset. If the rally struggles again or rotates away from growth, be ready to act.
Read The Big Picture every day to stay in sync with the market direction and leading stocks and sectors.
Please follow Ed Carson on Twitter at @IBD_ECarson for stock market updates and more.
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