Dow Jones Futures: Another Bullish Stock Market Rally; What To Do Now

Dow Jones futures rose modestly late Thursday, along with S&P 500 futures and Nasdaq futures. The Dow Jones, S&P 500 and Nasdaq composite rebounded from deep intraday losses to close with modest to solid gains Thursday. That’s after Wednesday’s huge stock market rally. We’re a long way from a confirmed uptrend, but Thursday’s action — after tumbling intraday — was clearly positive. Also, leading stocks led the rebound, with PayPal (PYPL), ServiceNow (NOW), Workday (WDAY), CyberArk Software (CYBR) and Atlassian (TEAM) making notable moves. It’s time to pay close attention to the stock market and get serious about watch lists.

Dow Jones Futures Today

Dow Jones futures rose 0.2% vs. fair value, reversing earlier losses. S&P 500 futures climbed 0.3%. Nasdaq 100 futures rose 0.3%. Remember that overnight action in Dow futures and elsewhere doesn’t necessarily translate into actual trading in the next regular session. Dow Jones futures overnight Thursday certainly didn’t foreshadow Wednesday’s stock market rally or Thursday’s upside reversal.

Stock Market Rally

At Thursday’s stock market lows, the Dow Jones, S&P 500 index and Nasdaq composite gave up more than half of their Wednesday rally. That would have been discouraging. The afternoon rally was very positive. For the second straight session, the stock market rallied into the close with gains. That’s a reversal of the recent bear market action of decent opens and weak closes.

The Dow Jones climbed 1.1%, the S&P 500 index 0.9%, and the Nasdaq composite 0.4%. The Nasdaq lagged as Apple (AAPL) and (AMZN) fell 0.6%, while Microsoft (MSFT), Facebook (FB), Netflix (NFLX) and Google parent Alphabet (GOOGL) had fractional gains.

Thursday’s action arguably was more bullish than Wednesday’s. With stocks crashing to new lows on Christmas Eve, the market was due for a bounce. The real question is whether a sustained rally will take hold.

What Investors Should Do Now

One day is not a confirmed uptrend. Neither is two days. But a classic follow-through day could come as soon as Dec. 31, the fourth day of a stock market rally attempt. Pay close attention to the major averages and leading stocks. Read the Stock Market Today columns as well as The Big Picture every market day.

You’ve spent enough time with your family during the holiday season. The Santa Claus rally is coming to town, and you need to work on your own naughty-or-nice list. IBD’s Stock Lists, including the IBD 50, are a great place to find top stocks that should be on your watch list. Check out Leaderboard, IBD’s premium service that offers detailed annotated charts of a select handful of leading stocks at or near buy points.

PayPal stock, Atlassian stock, ServiceNow stock and CyberArk stock are all members of the IBD 50 list.

PayPal Stock

On Thursday, PayPal stock rose 1.8% to 84.31, reclaiming its 50-day and 200-day averages. The relative strength line, which tracks a stock’s performance vs. the S&P 500 index, is at a new high. PayPal hit a recent low on Oct. 11, then made a couple of higher lows as the stock market correction turned into a bear market. PayPal is working on a 93.80 buy point, though the 89 level has acted as resistance.

Atlassian Stock

Atlassian stock has held above its 50-day line throughout December. On Thursday, shares rose 2.6% to 87.57, approaching a cup-with-handle buy point of 89.92. The RS line is at a new high even though Atlassian stock is well off of its 98.21 peak.

ServiceNow Stock

Another software name, ServiceNow stock was among the first leaders to turn positive Thursday, closing with a 5.1% gain to 178.20 after soaring 6.7% Wednesday. Shares reclaimed their 50-day line and finished just below their 200-day average. ServiceNow stock has a potential buy point of 206.39. Its RS line already is at a new high.

CyberArk Stock

The cybersecurity play gained 3.6% to move above its 50-day line. On Wednesday, CyberArk stock jumped 5.7%, rebounding from its 200-day. CyberArk stock has an 84.31 buy point after the company gapped higher Nov. 8 following its latest earnings report. The RS line is just below a new high.

Workday Stock

While not on the IBD 50, Workday stock does boast a best-possible 99 IBD Composite Rating. (So do Atlassian stock, ServiceNow stock and CyberArk stock. PayPal stock is at a 97.) Workday stock climbed 3% to 158.49 after rocketing 8% on Wednesday. That puts Workday stock back above its old 157.22 buy point cleared on Nov. 30, when the software company delivered strong earnings. However, Workday ultimately fell back more than 8% below that entry, making it invalid.

You could argue that the bear market conditions and Workday’s 50-day-line support are extenuating circumstances. But in any case, there’s no confirmed uptrend. Investors also could look for Workday stock to clear the Dec. 4 peak from a new consolidation.

Resist the temptation to buy before a confirmed stock market rally. When there is a follow-through day, whether it’s next week or months away, you don’t have to rush back in. There’s nothing wrong with making a few judicious purchases and slowly expanding if the rally continues to build momentum.


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Dow Jones Futures: This Often Happens After A Sharp Stock Market Correction

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Originally posted 2019-09-19 23:29:21.


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