Stock futures veered lower Tuesday, with the Nasdaq angling toward its sixth loss in the past seven sessions. Tesla and Apple both weighed heavily on early action, as chipmakers and growth stocks also took hard early hits. 3D Systems and NortonLifeLock rallied on earnings. Nike led the Dow Jones today following an analyst upgrade.
Dow Jones futures skidded 0.8% lower, as Apple (AAPL) and Boeing (BA) backed off almost 3% apiece. S&P 500 futures tumbled 1.3% below fair value. Nasdaq 100 futures dived 2% on the stock market today, with Tesla (TSLA) swerving 7.3% lower, to the bottom of the Nasdaq 100.
Small caps outpaced the early selling, with Russell 2000 futures down 2.3%.
NortonLifeLock (NLOK) led the S&P 500, up 2% after reporting earnings late Monday.
Commodities and mining plays that led Monday’s early rally generaly backed off early Tuesday. Although specialty chemicals maker Ferro (FOE) spiked 22% after private equity firm American Securities agreed to acquire the company in a $2.1 billion deal.
Germany-based BioNTech (BNTX) tumbled 4.5%, despite the Food And Drug Administration’s expanded approval for the company’s Covid-19 vaccine for use by persons from 12 to 15 years old. Brokerage Bryan Garnier downgraded BioNTech shares to neutral, from buy, but hoisted th stock’s price target to 206, from 135. BioNTech vaccine parter Pfizer (PFE) shed 0.9% in early trade. The iShares Nasdaq Biotechnology ETF (IBB) dropped 1.8%.
Stocks to watch for Tuesday, according to IBD’s Investing Action Plan, include Ruth’s Hospitality (RUTH), which is back below a 26.97 buy point. MarineMax (HZO) is in a buy range above a 64.09 entry. Deere (DE) has pulled back below a 392.52 buy point. Thor Industries (THO) is below a 148.18 entry, and rival Winnebago (WGO) is working on an 87.63 pivot. Jefferies Financial (JEF) is near a 34.96 buy point, but has also pulled back below a 33.68 early entry.
Dow Jones Today: Nike Upgraded
Nike (NKE) thinned its early gain to 0.1%, a nominal advance, but enough to lead the weak premarket action on the Dow Jones today. Jefferies upgraded Nike stock to buy, from hold, and hoisted the stock’s price target to 192, from 140. The target is more than 41% above where shares finished on Monday.
Nike stock is starting its second week back above support at its 10-week moving average, after a 10-week battle below that line. Shares have been consolidating for the past four months, and the chart pattern has yet to form a workable base pattern.
Apple’s early 3% loss pointed to a breakdown below support at the stock’s 50-day line, leaving it with a fair amount of work to do before a buy opportunity is likely to occur.
Tesla Heads For 200-Day Test
Tesla shares dived after Reuters reported the company planned to halt expansion of its China gigafactory, along with plans to make it a global manufacturing hub, due to the country’s strained relations with the U.S.
The maker of luxury electric autos has paced the Nasdaq’s overall recent decline, with shares now tacking toward a fourth weekly loss, vs. a three-week pullback for the Nasdaq. Tuesday’s early action suggested a drop to near the stock’s 200-day moving average, a level of support it has not tested since the pandemic bear market in March 2020.
Earnings News: 3D Systems, IGT Rally
In earnings news, Tuesday’s early rallies were primarily laggard stocks. 3D Systems (DDD) and CarParts (PRTS) soared around 10% each after reporting quarterly results. Shockwave Medical (SWAV) rallied 7.8%.
Colonial Pipeline/Gasoline Prices
Pipeline operator Colonial Pipeline reported it was restarting operations along its 5,500-mile products pipeline after a ransomware attack forced it to shut down the line late Friday.
On Monday night, the White House said it was monitoring supply shortages in portions of the Southeast. The governor of North Carolina has declared a state of emergency, a preemptive move in preparation for potential shortages. The pipeline runs from Houston to Linden, N.J., with spurs feeding fuel into Tennessee and the Carolinas. It feeds approximately 45% of the gasoline supply to Northeast markets.
Retail gas prices had jumped 6 cents a gallon vs. the prior week, the AAA reported.
RBOB gasoline futures — or reformulated blendstock for oxygenate blending — the price benchmark for U.S. gasoline products, have been rising since March. RBOB hit its highest mark in 33 months on Friday. Prices briefly jumped above $2.21 a gallon on Monday, their highest mark since May 2018, before settling back to around $2.11 a gallon early Tuesday.
Dow Jones Today: Resting Up At 35,000
Investors will have a close eye on the Dow Jones today, after Monday’s late-day reversal snapped a five-day advance. The Dow’s mild 0.1% loss left the index just off its new high chalked up early in the session — the benchmark’s first move above the 35,000 mark.
That was in clear contrast to the Nasdaq Composite’s 2.6% dive, which sent the index below its 50-day moving average for the first time since March.
For more detailed analysis of the current stock market and its status, study the Big Picture.
The Nasdaq is now down 5.7% from its April 29 high, and facing firm resistance around the 14,000 level. The S&P 500 shed 1% on Monday, breaking a three-day run up, but finishing still well above its 21-day exponential moving average.
Both the Nasdaq and the S&P 500 added a distribution day on Monday, putting the market under a more serious caution flag. The stock market remains in a confirmed uptrend status. But for growth stock investors, the rise in distribution suggests zeroing in on stocks with strong RS Ratings that are building sound bases, along with relative strength lines that are at or near new high ground.
High RS Rated Stocks: L Brands, Invesco
Among the stocks that meet those criteria on the S&P 500 is L Brands (LB). The owner of Victoria’s Secret and Bath & Body Works is hovering in a buy range above a 68.01 buy point in a three-weeks-tight pattern.
Asset manager Invesco (IVZ) has logged a 62% gain since Dec. 31. The stock is also in a buy range above a three-weeks-tight entry at 27.18. It has a 95 RS rating and a relative strength line trading at fresh highs.
Goldman Sachs (GS) remains in a buy range on the Dow Jones today, above a cup base buy point at 356.95. The buy range runs to 374.80. Goldman Sachs’ RS Rating is an 87 and its RS line is just below its mid-March highs. The stock has a 39.8% gain this year.
Caterpillar (CAT) has a 33.3% gain so far this year and is in a buy range over a flat-base buy point at 237.88. CAT stock carries an RS Rating of 86. Its relative strength line is rising and also about even with its mid-March highs.
Dow Jones peer Home Depot (HD) remains well within its buy range after clearing a 328.93 entry in a three-weeks tight pattern. Home Depot’s RS Rating is a weak 67, although its RS line is on the midst of an 11-week advance, and at its highest level since late October.
Find Alan R. Elliott on Twitter @IBD_Aelliott
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