Dow Jones futures fell late on Wednesday along with the S&P 500 futures and Nasdaq futures. The Dow Jones fell modestly on Wednesday as the Nasdaq crashed to a new low, but the stock market rally is not “all dead” yet.
For equities in the real economy, Wednesday was normal or even positive. Boeing (BA), Citigroup (C), Flagstar Bancorp (FBC) and Had (AVNT) cleared purchase points or early entries.
The sell-off in growth stocks continued with Nasdaq underlining its lowest level by February 23rd. Become a home player Amazon.com (AMZN), Zoom video (ZM), Teladoc Health (TDOC), Datadog (DDOG) and 2U Inc. (TWOU) all broke under long-term support. Tesla (TSLA) retreated to a 2021-closing low while Nvidia (NVDA), Year (ROKU) and ServiceNu (NOW) tumbled decisively below their 10-week lines.
Marvell Technology (MRVL), Snefnug (SNOW), Okta (OKTA) and Splunk (SPLK) earnings at the end of Wednesday. But all of these technical stocks were about to break down or go in the direction of quarterly results and fell sharply on Wednesday.
Marvell earnings were in line and guidance mixed. Snowflake reported strong revenue growth, while Okta and Splunk beat views. Octa shares tumbled overnight with a $ 6.5 billion acquisition. Marvell fell sharply while SNOW stock rose slightly. Splunk stock, which is at a 10-month low, rose solidly.
Tesla Warehouse and Nvidia are on the IBD Leaderboard. ServiceNow Warehouse is on the IBD list of long-term managers. The Tesla and Nvidia stock is at IBD 50.
Dow Jones Futures today
Dow Jones futures fell 0.3% relative to fair value. The S&P 500 futures retreated 0.5% and the Nasdaq 100 futures fell 0.7%.
Keep in mind that overnight trading in Dow futures and elsewhere does not necessarily translate into actual trading in the next regular trading session.
Join IBD experts as they analyze action stocks at the stock market rally on IBD Live.
News about coronavirus
Coronavirus cases worldwide reached 115.76 million. Covid-19 deaths topped 2.57 million.
Coronavirus cases in the United States have affected 29.45 million with deaths over 531,000.
Stock market rally Wednesday
The stock market rally was sold and closed at low sessions. Names of real economy held up while tech giants withdrew and speculative names were sold.
The Dow Jones Industrial Average fell 0.4% in Wednesday’s trading after being slightly positive most of the session. The Boeing stock was a major Dow winner, however Apple (AAPL) and Microsoft (MSFT) weighed on blue chips. The S&P 500 index fell 1.3%, back below its 21-day line, but held just above its 50-day period. The Nasdaq composite tumbled 2.7%, stabbing through its 50-day line and undercutting its lowest on February 23rd.
The 10-year government return rose 6 basis points to 1.47% after retiring in recent days. The strong upward trend in long-term government bond yields has put pressure on the stock market rally, especially speculative growth.
Among the best ETFs, the Innovator IBD 50 ETF (FFTY) slipped 3.5%, while the Innovator IBD Breakout Opportunities ETF (BOUT) fell 3.25%. IShares Expanded Tech-Software Sector ETF (IGV) retreated 4.1% with Zoom Video and NOW stock remarkable components. VanEck Vectors Semiconductor ETF (SMH) lost 3.15%. The NVDA stock is a top SMH stock.
The Ark Innovation ETF (ARKK), which reflects more speculative history holdings, fell by 5.9% and the Ark Genomic Revolution ETF (ARKG) 6.3%. Both sign recent downturns where ARKK closes below them.
Tesla is the top holding across Ark Invest’s ETFs, including ARKK. Teladoc and Roku shares are also top-five sheet holdings, while Ark bought a lot of Zoom shares on Tuesday. Sheets also have great stakes in many smaller, less fluid names. These will be difficult to complete, especially when Ark Invest reveals much of its daily purchases and sales.
Boeing Stock breaks short
Dow Jones giant Boeing (BA) rose 2.4% to 228.56. Intraday hit stocks 235.40 and broke out from a buy point of 229.71 cups with handles on a weekly chart. Citigroup shares rose 3% to 70.38, clearing a buyout point of 69.52 cups, according to MarketSmith analysis. But Citi’s outbreaks come weeks after they are gone Goldman Sachs (GS), JPMorgan Chase (JPM) and even Wells Fargo (WFC).
Avient shares jumped 5% and broke out of a large-volume cup base. Flagstar stock rose 3% and rose sharply from its 10-week line as it builds the right side of its flat base. FBC was Wednesday’s IBD stock of the day. Avient stock was Tuesday’s.
Amazon, Zoom Video Break 200-day
Amazon, Zoom Video, Teladoc, Datadog and the TWOU stock fell below their 200-day moving average. AMZN shares fell 2.9% while the other four retreated 3.75% -9.5%. For Zoom and Datadog warehouse, it was their very first shutter ever under 200 days.
Amazon shares are one of a handful of trillion dollar companies.
Zoom Storage may be the ultimate coronavirus game, though Amazon and Teladoc have also thrived in the pandemic along with cloud-based Datadog and 2U. As vaccinations increase and Covid restrictions ease, investors who are richly valued at home companies will see slower growth.
Teladoc warehouse, Datadog and 2U broke out to new heights just a few weeks ago.
Tesla shares fell 4.8% to 653.20, the lowest close since December 23, but over last week’s intraday low of 619. Roku shares fell 5.2%, Nvidia 4.5% and ServiceNow 6.1 %.
Stock Market Rally ‘Mostly Dead’
Is this a violent stock market rotation out of growth or the beginning of a technologically led market correction? Strictly looking at Nasdaq and technology leaders, it looks like a correction in the stock market. But the Dow Jones and cyclical sectors held up well, while the S&P 500 index is barely above its 50-day line.
The market rally may be “mostly dead” to quote Miracle Max from “Princess Bride,” but it’s still “a little alive.” But where’s Miracle Max to revive the rally? At this point, more weakness is likely to push the “mostly dead” rally to “all dead.” On the flip side, it would take a lot to bring the market rally all the way back to life, just like Princess Brides Wesley.
This is an important day to read The Big Picture to stay in sync with the market direction and leading stocks and sectors.
One thing is for sure, growth, especially speculative growth, is in favor. Stocks may bounce back quickly or several weeks or months from now, while some may never bounce back.
Do not focus on 2020 winners like Zoom Warehouse or Datadog if they are performing poorly now.
I’m glad we focused on last year’s leaders last year. This year, I think we need to focus on this year’s leaders. What do you think?
– JC Parets (@allstarcharts) March 3, 2021
Investors should take a defensive stance, at least with technical names. If your stocks lose, you are either out of sync with the market, or the market itself is out of sync. Consider moving more to mining, industry, agriculture and finance. But if the entire market collapses decisively, the recent relative winners are likely to crumble as well.
Cash is king in a correction and it is a wise choice to keep much of it in the current market climate.
Follow Ed Carson on Twitter at @IBD_ECarson for stock market updates and more.
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