Dow Jones Futures: Netflix Stock, Microsoft Stock, Salesforce Stock, Visa Stock, Adobe Stock Near Buy Points

Dow Jones futures fell modestly Sunday night, along with S&P 500 futures and Nasdaq futures, as fourth-quarter Chinese GDP data showed the slowest growth since 2009 but in line with estimates. The stock market rally powered higher last week, with the Dow Jones, S&P 500 index and Nasdaq composite all reclaiming their 50-day lines. Microsoft (MSFT), Netflix (NFLX), Adobe (ADBE), (CRM) and Visa (V) are large-cap stock worth watching. Microsoft stock, Adobe stock, Salesforce stock and Visa stock are all within 5% of proper buy points. Netflix stock, which sold off Friday on mixed results and weak guidance, is well below a current buy point but seems poised to carve a new, lower entry.


All five stocks have market caps above $100 billion. Microsoft stock, with an $826 billion valuation, is just below (AMZN) at $829 billion for the market cap crown. Adobe and Salesforce stock boast best-possible IBD Composite Ratings of 99. Microsoft stock, Netflix stock and Visa stock all have 96 Composite Ratings.

Dow Jones Futures Today

Dow Jones futures fell 0.3% vs. fair value. S&P 500 futures retreated 0.3%. Nasdaq 100 futures lost 0.4%. China’s Shanghai composite rose solidly.

Chinese GDP rose 6.4% in the fourth quarter vs. a year earlier, in line with estimates. China’s economy expanded 6.6% in 2018 vs. 6.8% in 2017. Along with other December retail sales, industrial production and other monthly data, the reports show the world’s second-largest economy coming under more pressure at the end of last year. But investors feared that growth was even weaker than expectations.

Chinese leaders are working on stimulus measures but want to avoid the heavy-debt, low-return measures of the past.

Earlier, a Bloomberg report, citing U.S. sources, said Washington and Beijing are far apart on intellectual property theft and transfers, dimming some optimism about China trade talks that have lifted the stock market in recent weeks. The news on IP differences in China trade talks isn’t a surprise. The real question is whether President Donald Trump will accept a China trade deal in which Beijing buys a lot more U.S. goods, or if he will insist on progress on longer-term IP and subsidy concerns.

Remember that Dow futures and other overnight action don’t necessarily translate in actual trading in the next regular session. U.S. stock markets will be closed Monday for the Martin Luther King holiday.

Stock Market Rally

The stock market rally looks healthy, with the the major averages clearing key resistance last week on hopes for a China trade deal. It’s still unclear if this stock market rally is just a short-term tradable rally or the start of a significant uptrend beyond the 2018 highs. After the Martin Luther King stock market holiday on Monday, the next key test will be getting above the 200-day line. The Dow Jones is not far from this long-term level, followed by the S&P 500 and Nasdaq. The Nasdaq’s 200-day line is currently around the tech index’s Dec. 3 peak, which would be another test.

But what this stock market rally really needs is more top stocks breaking out into buy zones. More continue to do so, but it’s been a slowly increasing drip rather than a flood. Dozens of top stocks are piling up near buy points, so investors should keep a close watch.

Netflix Stock

Let’s get Netflix out of the way first. Netflix stock is currently 19% below its June 21 record high of 423.20. It’s 12% off its Oct. 2 peak, which could be interpreted as the start of a new cup base. However, Netflix appears to be making a handle right. A handle must must be flat to downward sloping and be at least five days long, shaking out weak holders. Netflix’s proto handle is just 3 days long after Friday’s 4% retreat. If Netflix stock holds in its current range — which is by no means assured as investors continue to digest the company’s earnings and guidance — it will have a proper handle as of Wednesday’s close with a buy point of 358.95.

This handle would be above the midpoint of the Netflix stock consolidation, using either the June 21 or Oct. 2 peak as the left side.

The relative strength line, which tracks a stock’s performance vs. the S&P 500 index, recently hit a six-month high.

Microsoft Stock

Microsoft stock had a failed breakout from a double-bottom base on Dec. 3, then plunged with the broader market through Dec. 24. During the sell-off, the RS line held in record territory, as Microsoft stock fell less than the S&P 500 index. But in the stock market rally, the Dow Jones tech giant has lagged slightly, though shares rose 4.8% last week to reclaim their 200-day and 50-day lines.

Microsoft stock is now 5% below a 113.52 buy point from a cup base starting on Dec. 3. Shares are 7% below the 116.18 all-time high from Oct. 3.

Salesforce Stock

Salesforce stock bottomed on Nov. 20 and didn’t come close to undercutting that level during the December market plunge. So the software giant’s RS line has been climbing, hitting new highs in the past couple of weeks. Salesforce stock reclaimed its 50-day and 200-day lines on the S&P 500 follow-through day on Jan. 4, then decisively moved above a key resistance area last week. Shares are now 5% below a 161.29 buy point in a consolidation going back to Oct. 1.

Adobe Stock

Adobe stock is working on a double-bottom base with a 260.82 buy point. The RS line is trading right around highs, but has been moving sideways since the end of May. Adobe stock decisively moved above its 50-day line last week and reclaimed its 200-day on Friday. Shares are 5% below the entry.

Visa Stock

Visa stock, like Microsoft stock, staged a failed double-bottom breakout attempt on Dec. 3., then tumbled to an eight-month low by Dec. 24. But the RS line slowly moved ever higher, and continued to advance in the early part of the stock market rally. Visa stock has been consolidating just above its 50-day and 200-day moving averages for the past couple of weeks. The Dow Jones financial giant now has a handle buy point of 139.58 within a consolidation going back to Dec. 3.


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Originally posted 2019-09-19 23:31:28.


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