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Dow Jones Futures: Current Stock Market Rally Shifts Into Bullish Phase For Top Stocks

Dow Jones futures were little changed Sunday night, along with S&P 500 futures and Nasdaq futures. The current stock market rally recently ended a short pause, with the Dow Jones, S&P 500 index and Nasdaq composite rallying to their best levels since early December. A growing number of top stocks have broken out into buy zones, including Boeing (BA), Salesforce.com (CRM), Mastercard (MA), Xilinx (XLNX) and Workday (WDAY). Note the absence of Apple stock and FANG stocks.




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The major indexes are far from highs, but the current stock market rally has shifted into a new phase: a tradable rally for top stocks.

Dow Jones Futures Today

Dow Jones futures were about even with fair value. S&P 500 futures were flat. Nasdaq 100 futures rose 0.1%. Remember that Dow futures and other overnight action don’t necessarily translate in actual trading in the next regular session.

Santa Claus Stock Market Rally Overdue

The stock market rally began after Christmas as a bear market bounce. The stock market correction had intensified in the final weeks into Christmas Eve. The Nasdaq composite and S&P 500 index entered bear market territory; the Dow Jones just avoided one. A rebound was long overdue, but it wasn’t clear if the stock market rally would have legs.

Confirmed Market Rally, But Breakouts Scarce

The S&P 500 index staged a follow-through day on Jan. 4, the day after the Apple (AAPL) plunge on holiday warning. That confirmed the current stock market rally. But the prior two confirmed rallies had failed in early November and early December. And after such a sharp, volatile stock market correction, few top stocks were ready to break out. Investors who wanted to play the market rally could do so via ETFs, such as SPY or QQQ. IBD Leaderboard bought UPRO, a triple-leveraged ETF mimicking the S&P 500, on Dec. 27.

Stock Market Rally Pauses

In mid-January, the major averages cleared their 50-day lines, then moved sideways for several sessions. That let top stocks move into position and build handles on bases.

More Top Stocks Break Out

Over the last several sessions, the stock market rally has ramped up again, clearing that short consolidation. Crucially, more top stocks are breaking out, from Xilinx stock, Boeing stock, ServiceNow stock, Salesforce stock and Mastercard stock to Deckers Outdoor (DECK), Visa (V) and TransDigm (TDG).

Xilinx stock is on IBD Leaderboard. So are ServiceNow, Mastercard and TransDigm stock. Workday stock is on Leaderboard’s watch list. Boeing and Visa are Dow Jones stocks. Several are on the IBD 50 list.

(Despite earnings-related rallies in Apple stock and Facebook (FB), the Dow Jones tech giant and FANGs are still damaged. Netflix (NFLX) is the only one above its 200-day, and just barely.)

Current Stock Market Rally Is Tradable

While the indexes aren’t rising as fast as they did right after Christmas, the current stock market rally has entered a more bullish phase in practical terms. With top stocks breaking out, it’s now a tradable rally — CAN SLIM investors can play this market.

Top Stocks Near Buy Points With Earnings Due

Fabrinet (FN), Vertex Pharmaceuticals (VRTX) and Zendesk (ZEN) are top stocks in buy range with earnings this week.

Meanwhile, Alexion Pharmaceuticals (ALXN), Tableau Software (DATA), Paycom (PAYC), Spirit Airlines (SAVE), New Relic (NEWR), O’Reilly Auto Parts (ORLY), WWE (WWE), Match Group (MTCH), Versum Materials (VSM), Euronet Worldwide (EEFT) are all near buy points with earnings this week.

Those are just top stocks in or near buy zones with earnings due.

Google stock, not near a buy point, reports Monday.

Stock Market Rally: What’s Next?

The current stock market rally has powered higher over several weeks and is now actionable. However, that doesn’t mean it’s the start of a long bull market.

The next big resistance for the stock market rally may be the indexes’ Dec. 3 peak. Right above that are the November highs. The stock market could pause or pull back around these levels for a few days or weeks. Top stocks could reverse, so watch your overall exposure and avoid buying or pyramiding too high.

If the major averages move on, the stock market rally can target the late-September and early October record highs. Only if the market moves decisively to news could could investors start feeling confident that it’s a longer-term advance.

Bottom line: Take advantage of the current stock market rally, but be nimble.

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