Defense Stocks Lead, Can Netflix Make It 6 ?

Premarket trading leaned toward a positive open on Monday, as defense names posted some early gains following Friday’s U.S. missile attack on Syria, and investors looked to earnings results from Bank of America (BAC), Netflix (NFLX) and others.


Futures for the Dow Jones industrial average hopped up 0.6% as United Technologies (UTX) and Home Depot (HD) grabbed early gains. Futures for the Nasdaq 100 and the S&P 500 also traded 0.6% above fair value in premarket trading.

The market’s young rally met resistance Friday as the Dow, S&P 500 and the Nasdaq all deflected from their 50-day moving averages. The three indexes are now contained in the narrowing range between support at their 200-day, and resistance at their 50-day levels. The market’s status remains positive, but investors should stay wary – a significant move past either moving average could either reinforce or dismantle the uptrend.

China stocks were mixed in premarket trading after a tough session on Friday, and after China’s stock markets lost ground Monday.

Bank of America advanced 0.9% after reporting better-than-expected first-quarter results. Netflix, an IBD Leaderboard stock, is scheduled to report results after the market’s close.

The U.S. led airstrikes vs. Syria on Friday, in retaliation for the Syrian government’s alleged use of chemical weapons a week earlier. Russia condemned the action, but threatened no response and said none of its troops stations in Syria were injured.

Syria returned to bombing civilian locations with conventional weapons on Sunday. President Trump declared “Mission Accomplished” on Twitter.

Netflix Leads FANGs, Northrop Nears Buy Point

Defense contractor United Technologies bolted 2.2% higher, Home Depot knocked out a 1.6% gain. Both stocks are battling to hold support at their 200-day moving averages.

Among other defense-related names, Boeing (BA) rose 0.6%, Raytheon (RTN) climbed 0.7% and Northrop Grumman (NOC) jumped 1.3%. Northrop is below a 359.53 buy point in a second-stage flat base.

Netflix gained 1.3%, stepping off an easy lead among its FANG stock peers. The streaming entertainment leader is sitting atop a five-day advance that left shares up nearly 8% last week. That reversed a four-week decline and provided investors a buying opportunity as the stock rebounded from support at its 10-week moving average. Shares are now extended following that rebound.

China Stocks Mixed, IBD 50 Active

China-based stocks were mixed in premarket action, following sharp losses Monday on China’s markets. The Shanghai Composite tumbled 1.5% and Hong Kong’s Hang Seng index closed 1.6% lower. The People’s Bank of China on Friday further tightened restrictions on brokerages lending to investors and bank-lending to developers. China also expects the release of first-quarter GDP data on Tuesday.

China Lodging Group (HTHT) dropped 3.6%. The hotel chain reported preliminary first-quarter results showing occupancy rates trailing year-ago levels by notable margins. The stock has been attempting to climb off its 200-day moving average, within a two-month consolidation.

China-based e-commerce services provider Baozun (BZUN) rose 1.8%, giving it one of the best early gains among IBD 50 stocks. The stock is extended after pulling back to retest a 40.08 buy point following an early March breakout.

Other IBD 50 names were also active early Monday, led by Arista Networks (ANET) and PagSeguro (PAGS).

Arista jumped 1.9% in premarket trading, after diving more than 9% on strong trade on Friday. The loss stopped short of undercutting a February, leaving the cloud networking leader’s two-month basing effort so far intact.

Brazil-based PagSeguro climbed 1.6% ahead of the open. The January IPO pared losses to less than 1% Friday after finding support at its 50-day moving average. Shares ended down 14% from a March high, and 60% above their IPO price.

Data Coming Up: Retail Sales, Empire State Survey

The Commerce Department’s March retail sales and the New York Fed’s April Empire State manufacturing index are due at 8:30 a.m. ET. The NAHB’s Housing Market Index is set for a 10 a.m. ET release.


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Originally posted 2019-09-19 23:12:50.


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