ow Jones Futures: Apple Stock, Google Stock Forge Buy Points; When To Buy The Lyft IPO

Dow Jones futures rose early Friday, along with S&P 500 futures and Nasdaq futures. The Lyft IPO priced at 72 a share, the top of its just-raised range. Earlier, Apple stock and Google parent Alphabet (GOOGL) forged new buy points. But wait for Lyft (LYFT), Apple (AAPL) and Google stock to prove themselves.




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Dow Jones Futures Today

Dow Jones futures advanced 0.25% vs. fair value. S&P 500 futures rose 0.25% above fair value. Nasdaq 100 futures climbed 0.35%. Remember that overnight action in Dow futures and elsewhere doesn’t necessarily translate into actual trading in the next regular stock market session.

Current Stock Market Rally

The major averages rose modestly with intraday swings in what was ultimately an inside day. Among top ETFs, the Innovator IBD 50 (FFTY) popped 1.1%. The iShares Expanded Tech-Software Sector ETF (IGV) rose 0.75% but only after falling 1.4% Wednesday. The VanEck Vectors Semiconductor ETF (SMH) dipped 0.2% after skidding 1.5% the prior session.

The current stock market rally is still under pressure. Investors should be cautious about any new purchases.

Lyft IPO Prices At High End

Lyft priced at 72 a share, raising $2.34 billion. The ride-hailing giant hiked the expected Lyft IPO price range to 70-72 a share late Wednesday from the prior 62-68. Shares will start trading Friday under the LYFT stock ticker.

Don’t buy a new IPO right away. IPOs often rise sharply in the first hour, day or week of trading, then reverse lower. Sometimes they soonform an IPO base, but others fall back for months or even years. Facebook (FB) gapped up in its May 2012 debut but then closed right by the 38 offering price. Facebook stock sold off and didn’t reclaim its IPO price for more than year.

Snapchat operator Snap (SNAP) had a strong two days in its early 2017 debut. But shares then fell until late last year. While Snap stock has been rallying for the past three months, it’s nowhere near its first-week peak.

The Snap stock lesson is important as the Lyft IPO sets to debut. The Snap IPO was a much-hyped new issue with huge losses and a larger rival in Facebook. The Lyft IPO has a lot of hype with huge losses and a larger rival in Uber, which is set to have its IPO later this year.

Bottom line: Wait for a new IPO to break out of a proper base before buying.

Apple Stock

Apple stock edged up 0.1% to 188.72 on Thursday. With a handle now reaching a minimum five days, Apple stock now has a buy point of 197.79. The handle midpoint is slightly above the midpoint of the consolidation, so the entry is valid. But Apple is trading just below its 200-day moving average and is still 19% off its Oct. 3 peak.

After a brutal end to 2018, Apple is a top Dow stock so far in 2019.

The relative strength line has been trending higher for the past two months, but is well off its record high. The RS line, the blue line in the charts below, tracks a stock’s performance vs. the S&P 500 index.

Apple earnings growth slowed to 7% in the holiday quarter, with a 14% decline expected for the current quarter.

With iPhone sales stalling or falling, investors are pinning growth hopes on services. But Monday’s streaming service event didn’t answer many questions. To attract subscribers, Apple streaming content costs could be a drag on earnings in the short- to mid-term at least.

Google Stock

Google stock slid 0.5% to 1,172.27, falling for a fifth straight session. The FANG stock now has a 1,236.53 entry in an eight-month saucer-with-handle base. That handle buy point is not far from the Google stock peak of 1,291.44 set July 27.

Google earnings are a concern, though not as much as with Apple stock. Analysts expect Google earnings per share to rise 6% in Q1 and 4% in 2019.

Please follow Ed Carson on Twitter at @IBD_ECarson for stock market updates and more.

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