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Dow Jones futures rose vs. fair value early Thursday, along with S&P 500 futures and Nasdaq futures, ahead of the June jobs report. The coronavirus stock market rally had a solid session Wednesday for growth names, with upbeat economic data and vaccine news. That’s despite record new U.S. coronavirus cases as well as fresh Covid-19 restrictions and corporate actions.
Teladoc stock and Okta stock offered entries for aggressive investors. Tesla stock is extended.
AMZN stock, TSLA stock and TDOC stock are on IBD Leaderboard, along with Apple stock. Okta stock is on SwingTrader. FB stock and NFLX stock are on the IBD 50 list. Google stock is on the IBD Long-Term Leaders watchlist.
While growth stocks fared well, many “real economy” names continue to lag. It’s a stock picker’s market. Diversify among leaders, but not across the stock market.
Dow Jones Futures Today
Dow Jones futures rose 0.85% vs. fair value, while S&P 500 futures were up 0.7%. Nasdaq 100 futures climbed 0.7%.
Late Wednesday close, news broke that the CEOs of Apple (AAPL), Facebook, Amazon and Google will appear before a House antitrust panel. That hearing will be the end of the panel’s probe, which may result in new legislative proposals to rein in Big Tech. But shares of all four tech giants rose slightly before Thursday’s open
The June jobs report will likely swing Dow Jones futures at 8:30 a.m. ET on Friday. Economists expect the mid-month jobs report to show a payrolls gain of 3 million after May’s surprising increase of 2.51 million. The unemployment rate should fall to 12.4% from May’s 13.3%.
Remember that overnight action in Dow futures and elsewhere doesn’t necessarily translate into actual trading in the next regular stock market session. DJIA futures were negative early Tuesday until an upbeat ADP employment report and positive coronavirus vaccine trial data shortly before the open.
Coronavirus News
Coronavirus cases worldwide hit 10.83 million. Covid-19 deaths rose above 519,000.
Coronavirus cases in the U.S. have climbed to 2.78 million, with deaths near 131,000. New U.S. Covid-19 cases topped 51,000 on Wednesday, a record high, after clearing 40,000 for six straight days.
Arizona, California, Texas, Florida, Georgia and several other states are hitting record new coronavirus cases. Increased testing is a big factor, but the share of positive tests has spiked in many states as well.
New York halted plans to resume indoor dining amid the nationwide resurgence. That comes a day after New Jersey made the same move. On Tuesday, New York added California and seven other states to its Covid-19 quarantine rule. Travelers to New York from hot spot states must quarantine for 14 days.
Apple is closing 30 more Apple Stores as of Thursday. That’s a total of 77 Apple Stores closed down temporarily once again as coronavirus cases soar again in much of the U.S. Apple stock edged lower Wednesday, but it’s still near record highs.
Fellow Dow Jones component McDonald’s (MCD) is pausing further re-opening of dine-in service in the U.S. Shares fell late Wednesday but turned slightly higher in Thursday’s premarket.
Covid-19 Deaths have continued to trend lower for the past several weeks despite soaring coronavirus cases. However, Arizona did report a daily record for coronavirus deaths, along with a new peak in daily infections. Texas reported its highest daily death toll in six weeks.
A reason for optimism is progress on coronavirus treatments and vaccines. Early Tuesday, Dow Jones giant Pfizer (PFE) and BioNTech (BNTX) announced positive early Phase 1/2 Trial results for its coronavirus vaccine candidate. But there some side-effects at higher doses and the results haven’t been peer reviewed. Pfizer stock pared gains but still closed with a 3.2% gain. BioNTech stock closed down 3.9%.
Coronavirus Stock Market Rally
The coronavirus stock market rally had a modest but upbeat session on the Pfizer-BioNTech vaccine news and upbeat economic data. The ISM manufacturing index shot up 9.5 points in June to 52.6, better than expected and back above 50, signaling growth. Before the open, the ADP employment report found that private jobs grew by 2.37 million, less than expected. But May’s figures were revised from -2.76 million to a gain of 3.065 million.
The Dow Jones Industrial Average faded into the close, sliding 0.3% in Wednesday’s stock market trading. The S&P 500 index rose 0.5%. The Nasdaq composite climbed 0.95%. The big-cap Nasdaq 100 hit a record high, with FANG stocks Facebook, Amazon, Netflix and Google all contributing, along with Tesla stock.
Among the best ETFs, the Innovator IBD 50 ETF (FFTY) rallied 1.25%. The iShares Expanded Tech-Software Sector ETF (IGV) jumped 2.1%, hitting a record high. The VanEck Vectors Semiconductor ETF (SMH) sank 0.6%.
While there are many growth stocks showing bullish action, it’s a stock picker’s market. Although the Nasdaq is right at record highs, the Dow Jones today is still below its 200-day line.
Tesla Stock Soars On Deliveries
TSLA stock shot up 10% to 1,228 before the open, signaling a new all-time high.
Tesla delivered 90,650 deliveries, above estimates of around 88,000. Model 3 and Y deliveries were 80,050, while Model S and X deliveries were 10,600. Overall production from the Fremont and Shanghai plants were 82,272.
In news that broke late Wednesday, another “leaked” Musk email praised staff, “Just amazing how well you executed, especially in such difficult times.” Meanwhile, Wedbush analyst Dan Ives raised his TSLA price target to 1,250 from 1,000, and his bull case target to 2,000 from 1,500.
Tesla stock rallied 3.7% to 1,119.63 on Wednesday. That extended Tuesday’s 7% surge, clearing a short shelf consolidation, as well as Monday’s 5.2% pop. Optimism soared after a “leaked” email Tuesday afternoon from CEO Elon Musk to employees said Tesla was close to being break-even.
At this point, Tesla stock is well extended even from the short consolidation, especially with delivery news on tap. Investors are pricing in a lot of good news for Tesla stock, both short and long term.
Tesla stock does have a potential options play for investors who believe it’ll hold above 1,000 over the next several weeks.
In addition to Tesla stock, Chinese rival Nio (NIO) continued to surge after reporting its Q2 deliveries. EV delivery van startup Workhouse Group (WKHS) and Blink Charging (BLNK), which have hot stocks in recent days, also are up sharply before the open. The exception is EV and hydrogen truck startup Nikola (NKLA).
Tesla Earnings?
If Musk wants to report Tesla earnings for the second quarter, he likely can recognize sufficient emission credits and Full Self Driving revenue to make that happen. Another quarter of Tesla earnings could spur TSLA stock’s entry into the S&P 500 index.
Also late Wednesday, the NHTSA confirmed to the Los Angeles Times that the safety regulator is probing a possible design flaw in older Model S battery packs. Last week Business Insider said Tesla knew of the flaw that made them at higher risk of fires, but choose not to fix it.
Tesla Deliveries, Production Outlook
Looking ahead to third quarter, Tesla production should be at high voltage. Demand is more of an unknown.
It’s unclear how much backlog remains in the U.S. for the Model Y, though price cuts and a lower-priced variant could keep demand going.
Europe potentially could see a boost in Tesla sales, fueled by new subsidies and perhaps limited supply in Q2. However, EV competition is growing in Europe, with the cheaper VW ID.3 finally set to launch in September.
As for China, how much backlog will remain for the relatively new made-in-China Tesla Model 3 LR variant, especially with lower subsidies? Several EV and hybrid rivals are entering the field.
Tesla has now trimmed the China price of imported Model S and Model X vehicles by 1%, offsetting a July 1 price hike for “FSD.” In the U.S., Tesla hiked the cost of FSD by $1,000 on July 1 to $8,000.
Amazon Stock Hits High
Amazon stock rose 4.35% on Wednesday, hitting a record high. AMZN stock is acting well but doesn’t have an actionable buy point.
Netflix Stock A Buy
Netflix stock advanced 6.7% to 485.64, also setting a new peak. The internet TV streaming giant rose to the top of a “Must Keep TV” list.
NFLX stock cleared a 459.07 buy point on June 22. Shares soon pulled back before Monday’s bullish rebound from its 50-day and 10-week moving averages. Actionable entry points include 459.07 but also 474.11, just above the June 23 all-time high.
Facebook Stock, Google Stock Extend Rebounds
Facebook stock rose 4.6% to 237.55 and Google stock 1.7% to 1,442, both continuing to rebound strongly from sharp sell-offs. Both are potentially actionable, after Facebook stock and Google stock suffered serious damage last week.
On Friday, FB stock plunged 8.3% to 216.08 as a Facebook ad boycott grew. That was below its 50-day line and slightly above its original 215.38 cup-with-handle buy point. Monday morning, Facebook stock tumbled to 207.11 intraday. At this point, anyone who bought at an alternative 224.30 entry should have been long gone, while even those who bought near 215.38 probably should have exited. However, FB stock rallied to close higher on Monday, then kept rising.
For investors who hung on to Facebook stock, they can keep holding. Anyone looking to enter or reenter FB stock may want to wait for a move above the 245.19 high. Even better, shares will consolidate for a time before making a new move.
Google stock dived 5.45% on Friday to 1,362.54, below its 50-day line and its 1,145.63 cup-with-handle buy point, according to MarketSmith analysis. GOOGL stock reclaimed its 50-day line and its original entry point on Tuesday.
Google stock never triggered the 7%-8% down automatic sell rule, though investors understandably might have exited the position. GOOGL stock may be forming a new handle with a 1,475.89 entry.
Teladoc Stock
Teladoc stock rose 4.2% to 198.85. Shares hit 201.33 intraday, just clearing a very short trend line. That could provide an early entry for TDOC stock. Investors also could use 208.73 as a high-handle buy point from a recent consolidation.
Okta Stock
Okta stock jumped 5.3% to 210.92, a new high. The cybersecurity leader cleared a short consolidation, though it’s too short for a proper base. But aggressive traders might use 205.81 or 206.19 as an entry point.
Coronavirus Stock Market Rally Won’t Stop
After last week’s sell-off, the expectation was that the coronavirus stock market rally would take a breather, perhaps with a deeper pullback or sideways action over several weeks. That would be normal and healthy, and perhaps overdue. The market rally’s ascent has been too fast, too furious to be sustainable long term.
But the stock market rally is going to do what it’s going to do. The Nasdaq is at record highs with growth stocks powering ahead. Facebook stock and Google stock looked seriously damaged Monday morning, but now look a lot better. Netflix stock, Okta stock and Teladoc are in or flirting with buy areas, while Tesla stock has taken off like a SpaceX rocket.
Don’t try to guess what the stock market trend will be; pay attention to what the market is doing right now. Right now, it’s a good time to be invested in growth stocks. But stay engaged and ready to act.
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