Dow Jones Futures: Will Stock Market Rally Revive? Watch These Key Levels; Nio, Zoom On Tap

Dow Jones futures will open Sunday night, along with S&P 500 futures and Nasdaq futures. The stock exchange rally came under pressure recently, with the Nasdaq and speculative development names hardest struck.


Your home passed the $1.9 trillion Biden stimulus strategy early Saturday, consisting of $1,400 stimulus checks along with a $15 base pay that can’t be consisted of under Senate guidelines.

Tesla (TSLA) competitor Nio (NIO) and Zoom Video Communications (ZM) report profits Monday, however both huge 2020 winners are well off highs, along with Tesla stock itself.

This is a time to be protective and searching for stocks that are holding up well. Taiwan Semiconductor (TSM), General Motors (GM), RH (RH), Target (TGT) and InMode (INMD) deserve enjoying to see if they can form correct bases while the marketplace sorts itself out.

The marketplace rally, now an uptrend under pressure, is at a turning point. Gaining back crucial assistance levels would indicate renewed strength. However a Nasdaq break listed below recently’s low would send out a bearish signal.

Tesla stock and Taiwan Semi are on IBD Leaderboard. Tesla and TSM stock are on the IBD 50. RH was Friday’s IBD Stock Of The Day.

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Dow Jones Futures Today

Dow Jones futures will open at 6 p.m. ET Sunday, along with S&P 500 futures and Nasdaq 100 futures.

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 reached 114.36 million. Covid-19 deaths topped 2.53 million.

Coronavirus cases in the U.S. have hit 29.20 million, with deaths above 524,000.

The FDA on Saturday approved the Johnson & Johnson (JNJ) coronavirus vaccine for emergency use. An advisory panel late Friday recommended approval for the one-shot vaccine. J&J has pledged to provide 20 million doses in March and 100 million by the end of June.

Vaccinations hit a record 2.4 million shots on Saturday, breaking Friday’s record of 2.2 million.

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Stock Market Rally

The stock market rally had a lot of wild intraday swings, with the major indexes finishing with notable decline, near weekly lows.

The Dow Jones Industrial Average fell 1.8% in last week’s stock market trading after hitting a record high Wednesday. The S&P 500 index sank 2.5%. The Nasdaq composite tumbled 4.9%.

The 10-year Treasury yield rose 9% to 1.46% after briefly topping 1.6% on Thursday. While good news for many financials, higher rates weighed on growth stocks.

Among the best ETFs, the Innovator IBD 50 ETF (FFTY) tumbled 6.6% last week, while the Innovator IBD Breakout Opportunities ETF (BOUT) plunged 7.8%. The iShares Expanded Tech-Software Sector ETF (IGV) slumped 6.8%, with Zoom Video stock a key component. The VanEck Vectors Semiconductor ETF (SMH) fell 5.1%, with TSM stock the top holding.

Reflecting more-speculative story stocks, Ark Innovation ETF plummeted 14.8% and Ark Genomics ETF 13.8%. Tesla stock is the top holding across Ark Invest’s ETFs.

Nio, Zoom Earnings On Tap

Chinese EV maker Nio and videoconferencing leader Zoom Video report earnings late Monday. Nio earnings and delivery forecasts will be closely watched, as competition heats up in China’s EV market. Zoom Video should stream in with another quarter of huge growth, with investors eager for insight into the company’s prospects as we move into a post-pandemic world later this year.

Zoom stock sank 10.5% last week to 373.61, listed below its 10-week line. Shares did find support at their 200-day moving average Friday. Investors who rode the huge gains in 2020 and are still holding ZM stock might choose to hold strong, but otherwise there are not strong reasons to have a position right now.

Nio stock plunged 17% last week to 45.78, now 16% below its 10-week line. That’s a decisive break and a strong sell signal, especially with earnings on tap. Longtime holders sitting on a huge gain could chose to hold some shares into the earnings report.

As for Tesla stock, the EV leader skidded 13.5% to 675.50. It’s now 14% below its 10-week line. It’s given up roughly half the gains from its powerful November rally. As with Nio, TSLA stock investors likely should have taken at least partial profits by this time.

Stocks To Watch

TSM stock tumbled 7.8% to 125.94 last week, but found support at the 50-day and 10-week moving average, edging higher Friday. In a strong market rally, investors might be looking for a rebound as a buying opportunity. But for now, investors likely should wait for TSM stock to finish a new base as the market sorts itself out.

General Motors sank just 2.4% last week to 51.33, but also found 10-week line support, bouncing slightly higher Friday. It could soon have a new base after hitting a record high in early February.

RH stock retreated 2.9% to 490.37 last week, testing its 50-day and 10-week lines. It has a flat base with a 542.11 buy point.

Target stock fell 2.9% last week to 183.40, below its 50-day and 10-week lines. But it’s still within a flat base with a 200.06 buy point. Target earnings are due Tuesday morning.

InMode stock dipped 0.2% to 68.96 and rose 2.7% on Friday. Shares have traded tightly over the past few weeks after hitting record highs. INMD stock has found support at the 21-day a few times in recent weeks. The relative strength line is right at record highs. INMD stock needs to form a base, but the action has been very strong.

Stock Market Rally Analysis

The major indexes retreated last week, especially the Nasdaq composite. The tech-heavy index tried to regain its 50-day moving average on Friday, but failed to close above it amid heavy selling at the close. Also, volume was much lighter on the up days than the downside.

For much of the week, the stock exchange rally looked like it might be in a violent sector rotation out of speculative growth and into real economy cyclical names. The Dow Jones hitting a record high on Wednesday provided further evidence.

However, the Dow Jones and S&P 500 fell sharply on Thursday-Friday, barely closing above their 50-day lines.

All the major indexes are below their 21-day exponential moving average. The 21-day line served as support for the Nasdaq during the April-September stock exchange rally and in the postelection market rally. But in recent days it’s served as resistance.

On the downside, Tuesday’s intraday low for the Nasdaq looms large. That low is essentially at the 13,000 level and the Jan. 29 low. A close below that area would likely mark the end of the current stock market rally. But we’re not there yet.

What You Should Do Now

Investors should be wary of making new buys until the Nasdaq is back above its 21-day line. You should have actually reduced exposure substantially over the past couple of weeks. If the Nasdaq undercuts and closes below Tuesday’s low, that would be a signal to move further into cash.

Analyze your holdings. Are there stocks you should have sold partially or entirely last week? Which are your long-term bets that you want to hold a core position in?

Even if you’re entirely in cash, it’s important to stay engaged. Work on your watchlists, focusing on high RS stocks like Taiwan Semiconductor and Target.

Check out the Relative Strength At New High list on the IBD Stock Screener. Also usage the RS Line At New High and RS Line Blue Dot stock lists on MarketSmith.

Make sure you’re looking at commodity-related plays, financials and other cyclicals.

Review your trades from the past several months. Look at your big winners and losers. Look for stocks that you owned that you sold too soon, missing out on big winners. Identify the chart patterns and the strengths and weaknesses in your trading moves.

Read The Big Picture every day to stay in sync with the market direction and leading stocks and sectors.

Please follow Ed Carson on Twitter at @IBD_ECarson for stock exchange updates and more.


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Jobber Wiki author Frank Long contributed to this report.