Futures for the S&P 500 index fell slightly vs. fair value late Tuesday. During Tuesday’s session, the major averages soared, with the S&P 500 index and Nasdaq composite both hitting record highs. Netflix (NFLX), Apple (AAPL), Facebook (FB), Broadcom (AVGO) and Salesforce.com (CRM) were among the many stocks retaking their 50-day moving averages.
X But Netflix’s move created a new buying opportunity for aggressive investors, while Apple, Facebook, Broadcom and Salesforce.com did not. The reason? Volume.
S&P 500 index futures dipped 0.1% vs. fair value. So did Dow futures. Nasdaq 100 futures retreated about 0.15% below fair value.
Netflix
Netflix rose 4.75% to 201.07 in volume that was 91% above normal, blasting above its 50-day moving average. Aggressive investors also might have traced a downward sloping line from the Oct. 17 high as another entry with a similar share price.
On the downside, Netflix’s relative strength line, which tracks the stock’s performance vs. the S&P 500 index, has been lagging since mid-October and hasn’t made headway since late July. Even with the recent rebound, the RS line is below where it was when Netflix’s stock price was last at these levels.
Netflix also offers a 204.48 flat-base buy point as a traditional entry.
Netflix is “miles ahead” of streaming rivals, Macquarie Research said, fueling Tuesday’s big stock gain.
IBD’S TAKE: Check out Investor’s Corner to learn about how to invest, including this article offering more detail on how the 50-day moving average and 10-week line offer buying opportunities.
Facebook rebounded from its 50-day as well, climbing 2.8% to 181.42. But unlike fellow FANG stock Netflix, Facebook’s volume was just 7% above normal. If you’re going to make an aggressive buy off the 50-day line, you want to see powerful trade. Adding to the caution: The stock’s RS line has lagged for some time, and hasn’t made a big rebound recently either.
Facebook has a new flat base with a 184.35 entry. Ideally the RS line would lead or confirm any breakout into a buy zone.
Apple
Apple nudged up 1.8% to 172.26, retaking its 50-day line on trade 10% below normal.
Apple just broke out past a 176.34 buy point on Dec. 18, but the RS line did not confirm that move. Shares fell back the next day and drifted lower by year-end even as the major averages held up well.
Broadcom
Broadcom, an Apple iPhone supplier, is one of just a few chip plays that are above the 50-day line, vaulting 3.9% to 267.01 on Tuesday. But volume was 20% below normal and the stock’s RS line is closer to a short-term low than a new high. Broadcom recently formed a new flat base with a 285.78 entry.
Salesforce.com
Salesforce.com climbed 2.1% to 104.41 on Tuesday, breaking a short downtrend as well as reclaiming its 50-day line. Volume was 15% below normal though. The RS line is lagging in recent weeks and hasn’t made much headway since late May.
Salesforce.com has a 109.29 flat-base buy point.
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