Dow Jones futures rose modestly late Monday, along with S&P 500 futures and Nasdaq futures. The stock market rally saw record highs on the major indexes led by megacaps Apple (AAPL), Microsoft (MSFT), Amazon.com (AMZN), Google parent Alphabet (GOOGL) and Facebook (FB), masking weakness in higher-octane growth names.
Apple stock, Microsoft, Amazon.com and Google all boast trillion-dollar valuations, while Facebook stock is the fifth-largest S&P 500 component at $789 billion. Apple has blown by several early entries and is nearly at the official buy point. Microsoft, Amazon and Google stock are all actionable.
In addition to the megacap techs of Apple, Amazon, Microsoft, Google and Facebook, several other big-cap names fared well, including JPMorgan Chase (JPM), Walt Disney (DIS), Visa (V) and Mastercard (MA). JPMorgan stock is in a buy zone, Disney is trying to clear a short consolidation while Visa and Mastercard are flashing early entries.
All of these stocks are in the S&P 500 index. Apple, Microsoft, Disney, JPMorgan and Visa stock are Dow Jones components as well.
Dow Jones Futures Today
Dow Jones futures rose 0.5% vs. fair value. S&P 500 futures climbed 0.4% and Nasdaq 100 futures were 0.25% above fair value.
The House OK’d a bill to increase the stimulus deal’s direct checks to adult Americans to $2,000 from $600. It’s unclear what the GOP-led Senate will do.
Coronavirus cases worldwide reached 81.66 million. Covid-19 deaths topped 1.78 million.
Coronavirus cases in the U.S. have hit 19.78 million, with deaths above 343,000.
The U.K. will likely approve the AstraZeneca coronavirus vaccine on Tuesday, helping to speed the immunization push. The U.K. has already been giving jabs of the Pfizer and BioNtech vaccine for several weeks.
AstraZeneca (AZN) CEO Pascal Soriot said Sunday that new data will show that the vaccine is as effective as the Pfizer and Moderna (MRNA) immunizations, protecting roughly 95% of patients. Further, the vaccine is 100% effective at preventing serious Covid cases, he added, something the Moderna vaccine also has shown.
Prior studies showed the AstraZeneca vaccine to be 70% effective, on average, but Soriot told the U.K.’s Sunday Times that “we have figured out the winning formula,” but didn’t give more details.
The AstraZeneca vaccine is far easier and cheaper to make the mRNA-based Pfizer and Moderna vaccines, especially key for developing nations.
AstraZeneca may not seek FDA approval for several weeks, until a U.S.-based late-stage trial is finished.
AstraZeneca stock rose 1.8% Monday. Pfizer dipped 1.2%, while BioNTech and Moderna both lost more than 9%.
Stock Market Rally
The stock market rally had a solid day, with all the major indexes hitting record highs, after President Trump signed the stimulus bill into law after threatening to veto it.
The Dow Jones Industrial Average rose 0.7% in Monday’s stock market trading. The S&P 500 index advanced 0.9%. The Nasdaq composite climbed 0.7%.
Meanwhile, many top growth stocks had a tough session.
Carvana (CVNA) tumbled 8.5%, nearly round-tripping a breakout at Monday’s low. Trade Desk (TTD) tumbled nearly 11%, breaking through its 21-day line. China EV stock Xpeng (XPEV) fell 9.2%, below its 50-day line for the first time ever. Shopify (SHOP) 6.4%.
Among the best ETFs, the Innovator IBD 50 ETF (FFTY) retreated 1.75%, while the Innovator IBD Breakout Opportunities ETF (BOUT) lost 2. The iShares Expanded Tech-Software Sector ETF (IGV) slid 1.4%, even with Microsoft stock as a top holding. The VanEck Vectors Semiconductor ETF (SMH) dipped 0.2%.
Apple stock rallied 3.6% to 136.69, bringing its monthly gain to nearly 15%. That’s a record close and just below the Sept. 2 all-time high of 137.98, with the buy point 10 cents above that. AAPL stock already cleared several early entries and is now extended from them, but a conventional breakout may come soon. The relative strength line for Apple stock has risen almost to a new high as well. The RS line, the blue line in the charts provided, tracks a stock’s performance vs. the S&P 500 index.
Microsoft stock climbed 1% to 224.96, the highest close since Sept. 2 and moving above a trend line. Shares already rebounded bullishly from the 10-week line over the prior several sessions. Another alternative entry for MSFT stock would be 228.22. The official buy point is 232.96, according to MarketSmith analysis.
Amazon stock popped 3.5% to 3,283.96, rebounding from the 10-week line and clearing some short-term resistance. It also crossed a short trend line start from the Oct. 12 high of 3,496.24. That high + 10 cents would be another early entry, with 3,552.35 the official buy point.
Google stock climbed 2.3% to 1,773.96, rebounding from its 10-week line and retaking its 21-day exponential moving average. It’s firmly back above a prior buy point of 1,726.20, while starting to build the right side of a new consolidation.
Facebook stock rose 3.6% to 277, back above its 50-day line. The RS line for FB stock hit a five-month low on Christmas Eve.
JPMorgan stock faded from intraday highs but still edged up 0.7% to 125.34. That’s in range from a 123.60 handle entry on a long, deep consolidation. The RS line for JPM stock has improved for several months but is still well off its December 2019 peak. A $30 billion buyback plan sparked last week’s JPM stock breakout, also buoyed by rising Treasury yields and widening Treasury spreads.
Visa Stock, Mastercard Stock
Visa stock rose 1.9% to 212.63 while Mastercard stock popped 2.5% to 344.47. Both have rebounded from their 10-week lines and just cleared short trend lines. Visa has a flat base with a 217.75 buy point, though investors could treat that as a handle within a consolidation going back to Sept. 2. For MA stock, investors could see 357.10 as a handle entry in its consolidation. The RS lines for Visa and Mastercard stocks have fallen modestly for several months, but that followed long runs of outperformance.
Disney stock rose nearly 3% to 178.86 to briefly clearing a short consolidation with a 179.55. That’s after running up on an early November breakout. Investors are bullish on the Disney+ streaming future while also looking ahead to a post-pandemic world where theme parks and movie theaters can reopen fully.
Stock Market Rally Rotation?
Over the last several weeks, growth investors have gotten accustomed to solid gains in their holdings while the major indexes moved slightly to modestly higher. That reflected big-cap techs such as Amazon stock moving sideways or rising slower than the broad market, with the notable exception of Apple. On Monday, the stock market rally flipped the switched, with tech titans and other large caps fueling solid gains in the major indexes as growth and speculative names retreated.
Big-cap techs have been out of favor for a few months, while financials have had a tough 2020. Maybe it’s time for these slower-moving but solid market performers to make a new advance, while growth names — especially coronavirus plays or coronavirus-friendly stocks —take a breather. But is this start of a longer-term rotation or just a momentary pause in growth stocks?
The short, post-Christmas week will make it harder to figure out. Also, some investors may be taking profits now, anticipating selling after Jan. 1 as investors can sell big winners without paying capital gains for another year.
But if you start trying to explain why your stocks are falling by guessing that investors are guessing that other investors will sell in the new year, you can talk yourself out of prudent portfolio management.
If a stock is tripping sell or profit-taking rules, don’t rationalize, be decisive. If your portfolio is taking a serious hit, perhaps you’ll want to cut holdings more broadly, while preserving full positions in a few core holdings.
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