Dow Jones futures fell slightly early Friday, along with S&P 500 futures and Nasdaq futures, as Walt Disney (DIS), Datadog (DDOG) and Cloudflare (NET) headlined earnings.
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The stock market rally had a mixed session on Thursday, but the Nasdaq composite and S&P 500 index hit record closes. Tilray (TLRY) and other marijuana stocks plunged Thursday after being high as a kite in recent days.
Stocks traded up and down on Thursday, with a strong finish pushing the Nasdaq back above the 14,000 level, powering past warning signs. Bitcoin rallied to record highs, amid the latest signs of institutional support.
Screen Of The Day: Cooking Your Own List Of Leading Stocks
The megacap techs Apple, Microsoft (MSFT), Amazon.com (AMZN) and Google-parent Alphabet (GOOGL) were meh. But big chip names such as Taiwan Semiconductor (TSM), Nvidia (NVDA), Lam Research (LRCX) and Applied Materials (AMAT) had strong sessions.
Disney stock, Datadog, Cloudflare and recent IPO Affirm (AFRM) reported earnings after all four closed in buy range.
Disney stock rose modestly on strong results. DDOG stock fell modestly amid mixed guidance. NET stock tumbled on in-line guidance. Affirm stock sold off despite beating views in its first-ever report since its IPO.
Marijuana Stocks
Aurora Cannabis (ACB) also reported earnings late Thursday. The Canadian pot producer topped revenue forecasts. Aurora stock fell 8% early Friday, reversing Thursday night gains. ACB stock tumbled 23.5% on Thursday but is still up 13% for the week.
Marijuana stocks plunged Thursday after huge gains. Tilray stock plummeted 50% to 32.16 on Thursday, after being up sharply before the open. It’s still above its 10-day line after closing 117% above that short-term level on Wednesday.
Aphria (APHA), which is merging with Tilray, skidded 36% on Thursday. Canopy Growth (CGC) and Cronos (CRON) lost 22% each.
Other marijuana stocks were narrowly mixed early Friday after the Aurora earnings report.
Justice Probes GME Stock Frenzy
Reddit investors have rushed into cannabis stocks following the quick rise and fall of GameStop (GME) and AMC Entertainment (AMC). The Justice Department has issued subpoenas to Robinhood and various brokerages and social media firms regarding the massive short squeezes in GME stock and others. The Commodity Futures Trading Commission is investigating Reddit investors’ talking up silver futures and related ETFs.
Also, the House Financial Services Committee plans a Feb. 18 hearing on the GameStop stock frenzy. Reddit CEO Steve Huffman will testify.
GME stock fell 0.2% to 51.10 on Thursday, the fourth straight day of below-average volume. GME stock is 89% below its Jan. 28 peak of 483. AMC stock lost 3.3% on Thursday, 73% off its Jan. 27 top of 20.66.
Apple (AAPL), Microsoft, Nvidia and TSM stock are on IBD Leaderboard. Nvidia stock and Taiwan Semi are on SwingTrader. Microsoft stock is on IBD Long-Term Leaders. TSM, Nvidia and AMAT stock are on the IBD 50 list.
Dow Jones Futures Today
Dow Jones futures were about 0.1% below fair value, even with Disney stock offering a slim boost. S&P 500 futures fell 0.2%. Nasdaq 100 futures sank 0.1%.
Remember that overnight action in Dow futures and elsewhere doesn’t necessarily translate into actual trading in the next regular stock market session.
Join IBD experts as they analyze actionable stocks in the stock market rally on IBD Live.
Coronavirus News
Coronavirus cases worldwide since the start of the pandemic reached 108.38 million. Covid-19 deaths topped 2.38 million.
Coronavirus cases in the U.S. have hit 28 million, with deaths above 486,000.
Stock Market Rally
The stock market rally continued to hover at record highs, trading up and down Thursday but in a relatively narrow range.
The Dow Jones Industrial Average closed just below break-even in Thursday’s stock market trading. The S&P 500 index rose 0.2% and the Nasdaq composite 0.4%.
The Bitcoin price jumped to a record high above $48,900 on Thursday night, pulling back to just below $48,000 Friday morning. Mastercard (MA) said it will facilitate Bitcoin and some other cryptocurrency transactions, while Bank of New York Mellon (BK) said it would be a cryptocurrency asset custodian. On Monday, Tesla (TSLA) said it had bought $1.5 billion in Bitcoin, sending the digital currency soaring.
Megacap Stocks
Apple stock edged down 0.2% to 135.13. Shares are consolidating just below a 138.89 cup-with-handle buy point. AAPL stock is finding support around its 21-day exponential moving average and just above its 50-day/10-week lines.
MSFT stock, a Dow Jones, S&P 500 and Nasdaq component like Apple, rose 0.7%. It’s still in a buy zone.
The two FANG trillion-dollar stocks, Amazon and Google, lost 0.7% and gained 0.1%, respectively. AMZN stock is forming a handle as it drifts back to its 50-day line. GOOGL stock is trading tightly after gapping out to record highs last week on earnings.
Chip Stocks
TSM stock, no slouch at a $722 billion market cap, popped 4.1%, clearing a short consolidation to a new high. Nvidia stock rose 3.3% to 610.03, still in range from Wednesday’s breakout above a 587.76 buy point. The graphics-chip leader raced past an early entry of $560.07 billion on Monday.
LRCX stock jumped 7.5%, just below a new high. AMAT stock leapt 6.7% to an all-time best. Several other chip-gear makers had big gains.
Among the best ETFs, the Innovator IBD 50 ETF (FFTY) climbed 1%, while the Innovator IBD Breakout Opportunities ETF (BOUT) advanced 1.2%. The iShares Expanded Tech-Software Sector ETF (IGV) rose 0.7%, with Microsoft stock a top component. The VanEck Vectors Semiconductor ETF (SMH) jumped 3.7%, with TSM stock the biggest SMH component. Nvidia, AMAT and LRCX stock are also major components.
Earnings
Disney earnings and sales beat while Disney+ subscribers now top 94.9 million. Disney stock rose 1.5% overnight. DIS stock edged up 0.75% to 191.05 on Thursday. On Monday, Disney cleared a 183.50 flat-base buy point after rebounding bullishly from its 50-day line recently. The buy zone for Disney stock runs to 192.68.
Datadog earnings beat views but its profit guidance was below some estimates. Datadog stock lost 4% in extended trade. DDOG stock rose 1.7% to 117.60 on Thursday, in range from a 111.59 cup-with-handle entry, according to MarketSmith. The DDOG stock buy zone ends at 121.37.
Cloudflare earnings narrowly beat while guidance was in line. Cloudflare stock retreated 4% before Friday’s open, below recent buy points. NET stock nudged up 0.4% to 91.24 on Thursday. Shares cleared an 88.87 consolidation buy point on Monday, with 87.25 as a slightly earlier entry. The official buy range ends at 93.31 for NET stock.
Affirm earnings and revenue topped fiscal Q2 views, with Q3 revenue guidance in line. Affirm stock fell nearly 6% in extended trade. AFRM stock advanced 2.8% to 139.99 on Thursday. That cleared the IPO base after trying to close above the 138.08 buy point in the prior two sessions. An early entry of 123.55 cleared Tuesday was a better entry.
Stock Market Rally Analysis
Bulls and bears have been fighting over the Nasdaq 14,000 in the past few days, with bulls gaining the upper hand into Thursday’s close. It would be healthy if the composite could hold right around these levels for several days or a few weeks. The Nasdaq is now 7.5% above its 50-day moving average, still extended and at risk of some sort of pullback. But the 50-day line could quickly catch up if the Nasdaq held around or slightly below 14,000.
Investors can thank Apple stock and the other megacaps. By going nowhere, they are helping to keep the stock market rally from overheating. That offers a little room for other leaders, such as chip and IPO names, to keep running. Of course, if Apple and tech titans began ramping higher, as they did in late January, the Nasdaq could quickly become very extended.
The major indexes have moved up and down in the past two sessions, but the daily swings have been relatively modest with slim changes by the closing bell. However, many leading stocks have seen big gains or losses — not just GME stock or Tilray. Investors have to keep that in mind that when developing a game plan.
If the stock market rally sold off, with the Nasdaq retreating to the 21-day line or even the 50-day, many highfliers, especially IPOs, could fall 10%, 20% or more. What’s your strategy for your holdings?
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