Dow Jones Futures: Trump Delays China Tariffs; Current Stock Market Rally Has Path To Highs Without Apple, Amazon, Google

Dow Jones futures rose modestly Sunday night, along with S&P 500 futures and Nasdaq futures, as President Donald Trump tweeted that “substantial progress” has been made in China trade talks so he will delay raising U.S. tariffs on March 1. The current stock market rally extended its win streak, with the major averages clearing key resistance and top stocks leading. While a negative headline or Trump tweet could roil the stock market rally, the all-time highs are its next clear challenge.  Notably, tech titans such as Apple stock and FANGs Facebook stock, Amazon stock, Netflix (NFLX) and Google parent Alphabet (GOOGL) haven’t led the current stock market rally, especially over the past few weeks.


Instead of Apple (AAPL) and internet giants such as (AMZN) and Facebook (FB), dozens of top stocks have led, especially in the software sector. Only a handful of chip names have cleared buy points, but the chip sector is enjoying its best outperformance for at least a year.

Dow Jones Futures Today

Dow Jones futures rose 0.2% vs. fair value. S&P 500 futures climbed 0.2%. Nasdaq 100 futures advanced 0.2%. Keep in mind that overnight action in Dow futures and elsewhere doesn’t necessarily translate into actual trading in the next regular stock market session.

The Shanghai composite surged 3.3% in Monday trading.

Trump Hails ‘Substantial Progress’ In China Trade Talks

President Trump tweeted Sunday afternoon that “substantial progress” has been made in China trade talks, including on “important structural issues” such as intellectual property protection and technology transfers. As a result, he’ll delay planned U.S. tariff increases on March 1, and signaled that a Mar-A-Lago summit with Chinese President Xi Jinping could be coming to seal a China trade deal.

It’s long been clear that China is willing to boost purchases of U.S. goods for trade peace. The real questions have been how much Beijing would address IP protection, forced tech transfers and other structural issues and whether Trump would take the deal. Trump’s tweets show that he’s likely to take China’s offer.

Growing optimism for a China trade deal have helped fuel the current stock market rally, while Trump himself had signaled that March 1 wasn’t a hard deadline. That could explain the rather subdued reaction in Dow Jones futures.

Current Stock Market Rally

Thanks to solid Friday stock market gains, the Dow Jones and Nasdaq rose for the ninth straight week, while the S&P 500 index also advanced. The Nasdaq composite seems to have passed 200-day. Nasdaq and Dow also above their short-term Dec. 3 peaks, just before the market’s 3-week nose-dive. The S&P 500 index right at those levels.

The current stock market rally faces little chart resistance until the indexes’ record highs, set from late August to early October. Of course, a market rally can stall at any time. But for now, investors can treat this current stock market rally as tradable. That means top stocks are breaking out and acting well, with room to run before the next obvious roadblock. Investors can make money in this rally, even if it’s only for a few more weeks.

Only when the indexes clear all-time highs can investors start treating this current stock market rally as the start of a longer secular bull market. In such an environment, investors can be more confident in holding onto potential big winners.

Apple Stock

Meanwhile, Apple stock had a few strong days after its Jan. 29 earnings report, but hasn’t made progress since then.  You can see that from the relative strength line, which has drifted lower again. The RS line, the blue line in the charts below, gauges a stock’s performance vs. the S&P 500 index. Apple stock is still 25% off its high and is well below its 200-day line.

Netflix Stock

After a post-Christmas rebound, Netflix stock has grinded higher since mid-January, with its RS line moving sideways or lagging. Technically, it’s in range from a handle buy point of 358.95 in a consolidation starting in early October or late June. But volume was weak as shares limped over the entry. Netflix stock hasn’t had an above-average volume day since Jan. 22.

Amazon Stock

Amazon stock just closed above its 200-day on Jan. 31 but, after that night’s mixed earnings report, immediately pulled back. Amazon stock has been finding support at the 50-day. The RS line has lagged since Jan. 7.

Facebook Stock

Facebook stock surged Jan. 31 on earnings, then spent a few days above the 200-day line. But Facebook stock and its RS line have since pulled back.

Google Stock

Google stock topped its 200-day line on Feb. 4 and then on Feb. 5 following its earnings report. But shares fell back below their 200-day on Feb. 6. The RS line has lagged since Jan. 4, the day the S&P 500 index confirmed the stock market rally. Google’s RS is now at its worst levels since early December.

If Apple stock, Facebook stock, Amazon stock, Netflix stock and Google stock start outperforming the indexes somewhat, it would give a big lift to the current stock market rally. They wouldn’t even have to be big winners.

But if not, the current stock market rally has shown it’s strong and broad enough to rise without these tech titans.


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Originally posted 2019-09-19 23:34:49.


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