Dow Jones futures will open on Sunday evening, along with S&P 500 futures and Nasdaq futures. Bitcoin pulled back Sunday after topping $61,000 for the first time ever.
The stock market remains split, but the rally is broadening out significantly, with more and more stocks from a variety of sectors breaking out. The one notable exception is Nasdaq and growth stocks, but even they had a tentatively positive week.
Delta Air Lines (DAL), Las Vegas Sands (LVS) and Marriott International (MAR) are among several travel stocks setting up bullishly in similar patterns, with United Airlines (UAL) already clearing a fresh buy point.
Eli Lilly (LLY) released more details Saturday from a phase two study showing its drug donanembab slowed cognitive decline in early Alzheimer’s patients by 32% over 18 months. That headline figure was released in January, sending LLY stock soaring. The more complete data were released at a conference and published in the New England Journal of Medicine. Certain other secondary goals were mixed.
LLY stock soared on the preliminary study results in January. It’s now in a flat base with a 218.10 buy point, finding support at its 21-day exponential moving average.
Volkswagen (VWAGY) will hold a battery-focused Power Day event before U.S. markets open on Monday, akin to Tesla’s Battery Day last year. VW earnings are due Tuesday, while the ID.4 crossover launches in China and the U.S. later this month. VW is leading the charge of traditional automakers rushing into electric vehicles. All of that could pressure Tesla sales and prices, as well as Tesla stock. VW stock has been soaring in recent months, outpacing fast-rising General Motors (GM) and Ford Motor (F).
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Bitcoin Price Tops $61,000
The Bitcoin price continue to run, reaching $61,788 before retreating to $60,000 on Sunday. Bitcoin’s previous peak was just over $58,000 on Feb. 21. Many financial institutions are mainstreaming Bitcoin as at least digital asset, while Tesla buying $1.5 billion of Bitcoin is one of several companies investing in the cryptocurrency. The $1.9 trillion Biden stimulus is seen flooding more money into Bitcoin and financial markets generally.
S&P 500 Additions
Finally, NXP Semiconductors (NXPI), Penn National Gaming (PENN), Generac Holdings (GNRC) and Caesars Entertainment (CZR) are set to join the S&P 500 index before the open on March 22. The stocks rose 3%-7% late Friday on the S&P 500 news. NXP stock could offer a buying opportunity as it bounces from its 10-week line, while Penn National, Genera and Caesars don’t appear actionable.
Dow Jones Futures Today
Dow Jones futures will open at 6 p.m. ET, along with S&P 500 futures and Nasdaq 100 futures.
Remember that overnight action in Dow futures and elsewhere doesn’t necessarily translate into actual trading in the next regular stock market session.
Coronavirus cases worldwide reached 120.30 million. Covid-19 deaths topped 2.66 million.
Coronavirus cases in the U.S. have hit 30.05 million, with deaths above 546,000.
The CDC on Saturday reported 4.575 million vaccinations in the U.S., obliterating the old daily record of 2.9 million. The new one-shot Johnson & Johnson (JNJ) vaccine is now joining the Pfizer (PFE)/BioNTech (BTNX) and Moderna (MRNA) vaccines.
While the U.K., Israel and the U.S. are rapidly vaccinating their populations, much of continental Europe is lagging far behind. Many European countries are seeing new Covid cases picking up again.
Stock Market Rally
The stock market rally continued to strengthen and broaden over the last several days, with the Dow Jones, S&P 500 and Russell 2000 hitting all-time highs.
The Dow Jones Industrial Average rallied 4.1% in last week’s stock market trading, hitting a record high the past four sessions. The S&P 500 index advanced 2.6% while the Russell 2000 surged 7.35%. The Nasdaq composite climbed 3.1%.
The 10-year Treasury yield jumped to a fresh 13-month high, up 10 basis points Friday to 1.63%.
Among the best ETFs, the Innovator IBD 50 ETF (FFTY) spiked 8% last week and the Innovator IBD Breakout Opportunities ETF (BOUT) leapt 9.6%, both easily reclaiming their 50-day lines. The iShares Expanded Tech-Software Sector ETF (IGV) climbed 2.7% and the VanEck Vectors Semiconductor ETF (SMH) edged up 0.9%. both below their 50-day lines.
Reflecting more-speculative story stocks, Ark Innovation ETF vaulted 8.2% and Ark Genomics ETF 7.8%, but both are far below their 50-day lines.
Read The Big Picture every day to stay in sync with the market direction and leading stocks and sectors.
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VW Power Day
Monday’s VW Power Day is Volkswagen de facto answer to last year’s Tesla Battery Day, but without a yearlong buildup. . It’s expected to detail its battery and infrastructure strategy, possibly showing off advances in pack or cell technology.
On Tuesday, VW will release full-year figures.
VW stock has surged 19% so far in March, hitting its best level since 2009, as investors buy into its EV strategy. GM stock and Ford are both up 15% this month. VW and Ford are greatly extended. GM stock cleared a messy consolidation Friday, but at 15% above its 50-day line it also seems extended.
Tesla stock is up 2.7% in March and 16% last week. But it’s been hitting resistance at its 21-day exponential moving average and still well below its 50-day line. Many highly valued growth stocks look similar to TSLA stock’s chart.
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Stock Market Analysis
The stock market continues to have a split personality with the Dow Jones, S&P 500 and Russell 2000 at new highs while the Nasdaq is just below its 50-day line.
Economic reopening plays are doing well, including mining, manufacturing, travel, transportation, various retailers and more.
And no wonder. The U.S. economy is going to shift from a massive recession to a huge economic boom in about a year. Coronavirus restrictions are waning as vaccinations pick up and cases decline, fueling a return to normal activity, including long-dormant travel. Meanwhile, the $1.9 trillion Biden stimulus just passed with $1,400 checks for most Americans rolling out, weeks after a more-modest Covid aid package with $600 checks. The White House and congressional Democrats are setting their sights on an even-bigger spending bill later this year, with trillions of dollars for infrastructure.
Just to highlight travel stocks, Trip.com (TCOM) surged past a three-weeks-tight pattern on Friday. The three-weeks tight is just above a prior base, so it offered an opportunity for investors to add shares or start a new position in TCOM stock. United stock peeked out of a similar short consolidation — though not a tight pattern — slightly above a base.
Delta stock, Marriott, Hilton (HLT) and Hyatt (H) are setting up in their own shelves. So is Las Vegas Sands stock, which has a three-weeks tight that looks messy on a daily chart but is extremely tight on a weekly.
Nasdaq Lagging, But Not Losing
The Nasdaq did have a solid gain last week, closing near the high of its weekly range after starting with a 2.4% tumble on Monday. On Friday, the Nasdaq did dip back below its 50-day as Treasury yields soared. But it held up relatively well, closing down just 0.6% on Friday, at session highs.
The Nasdaq still hasn’t confirmed that its rally attempt has legs and remains vulnerable to spiking Treasury yields. A Nasdaq follow-through day would ease fears that tech stocks would drag the broader market lower, as they did earlier in March.
But even if the Nasdaq rebounds, growth names still look damaged. An immediate rush back to new highs for Tesla stock or other highly valued names would not look normal. Also remember that Tesla and a lot of these stocks went on amazing runs last year. So there are multiple reason why they may need weeks or months to set up again in proper bases.
The surge in Bitcoin and other cryptocurrencies suggests there’s still a desire for speculative assets, so highly valued growth names could have yet another run. But even Bitcoin pulled back to key technical levels, consolidating for a few weeks before blasting higher again.
What To Do
The good news about the split market is that while growth stocks are on injured reserve, many economic recovery stocks have been breaking out and delivering strong gains.
So investors don’t have to sit on the sidelines. While CAN SLIM investors gravitate toward growth stocks for obvious reasons, many “model book” all-time winners have been turnaround plays. You need to be flexible, and recognize which stocks are working and which are not.
Look for stocks with strong relative strength. Pay close attention to those with robust earnings estimates and those that are setting up in sound bases.
If you don’t feel comfortable buying non-growth stocks, you could buy and ETF such as SPY, IWM or various sector plays such as XME (mining), JETS (airlines) or XHB (homebuilders). And you could always stay in cash until tech stocks truly recover.
Please follow Ed Carson on Twitter at @IBD_ECarson for stock market updates and more.
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