Stock market futures for the S&P 500 index, Dow Jones industrial average and Nasdaq 100 retreated early Wednesday after the Dow Jones led a rebound Tuesday. Apple (AAPL), Amazon (AMZN), Tesla (TSLA) and Nike (NKE) all advanced while Spotify (SPOT) debuted with its non-IPO IPO. But for those stocks and the overall market, remember that Tuesday was just one day.
Apple rebounded from its 200-day moving average, but its 1% gain actually lagged the S&P 500 index’s 1.3% advance. Amazon rallied 1.5%, but it’s suffered heavy damage over the past several sessions as President Donald Trump takes aim at the online sales giant. Tesla popped 6% after claiming progress on Model 3 production, but the stock has crashed over the last several weeks. Nike had a strong day, bouncing 4% to reclaim its 50-day moving average as the iconic brand consolidates near highs.
Spotify opened its direct listing at 166.90, rallied to 169, but closed near session lows, though above its 132 reference price. But even if the music streaming site had a fantastic debut, investors should wait for a proper entry.
Most important, the stock market is in a correction. The S&P 500 index reclaimed its 200-day line Tuesday. All but 11 of IBD’s 197 industry groups rallied after 195 groups lost ground Monday. But the market has had several one-day gains in recent weeks — Feb. 6, March 26 and March 29 — only to renew selling. Don’t try to call the exact bottom. Investors should look for several strong gains, preferably in heavier volume, to confirm a rally attempt.
Stock Market Futures
Stock market futures indicated modest losses vs. fair value. S&P 500 index futures fell 0.3%, Dow Jones futures slid 0.4% and Nasdaq 100 futures were off 0.5%. Overnight trading in stock market futures often doesn’t translate into the next regular session.
The Trump administration detailed planned China tariffs late Tuesday on some 1,300 mostly high-tech goods. China has vowed to retaliate with equal force.
Apple rose 1% to 168.39 in today’s stock market trading. The iPhone maker’s stock chart didn’t really change. The stock has a floor at its 200-day line with resistance at its 50-day line.
Amazon’s upside reversal was a big reason for Tuesday’s solid closing gains. But the stock remains below its 50-day/10-week line after plunging through that key support last week. Long-term Amazon investors may decide that they’ll look past Trump’s Twitter rants and focus on the e-commerce giant’s accelerating revenue growth. Keep in mind that Amazon has been in several late-stage breakouts, raising the risk of a failure.
Tesla shot up 6% on Tuesday after its first-quarter Model 3 production figures missed company targets but not as badly as feared. Tesla claimed it was making progress and that it won’t need to issue more equity or debt to finance operations this year. Still, Tesla just recouped Monday’s 5% loss. It has a long way to go to make up March’s 22% crash.
Longer-term, Tesla’s shares have underperformed the S&P 500 index since last June.
Nike closed above its 50-day moving average for the first time since March 21. The relative strength line is at an 18-month high. Apparel makers are a pocket of market strength. But Nike is not in buy range. In fact, it doesn’t even have a potential entry point yet. In a market correction, some stocks will make headway, but the odds are not in your favor.
Spotify went with a direct listing vs. a traditional IPO. From a 132 reference price, Spotify closed at 149.01, near the bottom of a 148.26-169 range. Investors should steer clear of a new issue in the first few weeks. If it sets up in a traditional consolidation or a short IPO base and breaks out, that’s a different story.
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