Dow Jones Futures Signal Stock Market Rally Pause; Tesla Stock, Three Giants In Buy Zones; Apple Ready To Bundle?

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Dow Jones futures were little changed early Thursday, along with S&P 500 futures and Nasdaq futures. The stock market rally rebounded powerfully Wednesday, with Apple and Tesla (TSLA), two big-cap losers Tuesday, leading the way. The S&P 500 is on the cusp of hitting a record high.

Apple (AAPL) is still extended while Tesla stock is offering an aggressive entry. Meanwhile, although Dow Jones futures dipped after hours, Microsoft (MSFT), Adobe(ADBE) and Google parent Alphabet(GOOGL) are among the many leading stocks staging bullish rebounds from the 10-week line.

Buying on pullbacks can offer a chance to build a sizable position with relatively little risk, depending on how far the stock has risen from that key support level. Google stock, Microsoft, Adobe and eBay (EBAY) are all relatively close to their 10-week lines.

Meanwhile, Dow Jones stock Cisco Systems (CSCO), new IPO Vroom (VRM), Chinese shipping giant ZTO Express (ZTO) and cybersecurity IPO Ping Identity (PING) reported earnings late Wednesday. Cisco stock, Ping and online used-car retailer Vroom tumbled on guidance. ZTO retreated on mixed results and trimmed guidance. Early Thursday, NetEase (NTES) reported better-than-expected earnings.

Separately, Apple reportedly plans to offer various “Apple One” subscription bundles of its services at a lower overall cost. The iPhone giant also is working on a virtual fitness subscription package. Shares rose a fraction early Thursday, while streaming music rival Spotify (SPOT) and Peloton Interactive (PTON) fell.

Apple stock is on IBD Leaderboard, along with Tesla, Microsoft and Adobe. Adobe and Microsoft stocks are on IBD Long-Term Leaders.

Dow Jones Futures Today

Dow Jones futures sank 0.2% vs. fair value. S&P 500 futures retreated 0.2% while Nasdaq 100 futures rallied to up 0.1% vs. fair value. Cisco was a modest drag on stock futures while Apple and Tesla provided a boost.

Coronavirus stimulus talks remain bogged down, with Democratic leaders and the White House still far apart on a deal.

Remember that overnight action in Dow futures and elsewhere doesn’t necessarily translate into actual trading in the next regular stock market session.

Coronavirus News

Coronavirus cases worldwide are at 20.83 million. Covid-19 deaths have topped 747,000.

Coronavirus cases in the U.S. have reached 5.36 million, with deaths above 169,000.

The coronavirus stock market rally rebounded strongly at the open and built momentum.

The Dow Jones Industrial Average rallied 1.05% in Wednesday’s stock market trading. The S&P 500 index popped 1.4%, just below a record high.

The Nasdaq composite leapt 2.13%, ending a three-day skid from Monday’s intraday all-time high. Apple stock, Microsoft and Tesla were among the drivers, along with Amazon.com (AMZN), Facebook (FB), Nvidia (NVDA) and Google.

Apple and Microsoft stock climbed about 3%. Both are members of the Dow Jones, S&P 500 and Nasdaq with valuations well above $1.5 trillion, so their gains and losses move markets.

Among the best ETFs, the Innovator IBD 50 ETF (FFTY) popped 2.4%. The iShares Expanded Tech-Software Sector ETF (IGV) climbed just 1.1%, even with major components Adobe and Microsoft stock doing well. The VanEck Vectors Semiconductor ETF (SMH) rallied 2.9% as many leading chip names rose 4%-7%.

Is the nascent sector rotation out of growth over? Maybe. Perhaps the stock market rally “rotation” was the leadership expanding to include more real economy stocks. Dollar General(DG) joined recent retail breakouts.

Tesla Stock Split Spurs Shares

Tesla shot up 13% to 1,554.76 after the electric vehicle leader said it would split shares five-for-one. Some of Wednesday’s gain likely reflected the overall stock market bounce, with the Tesla stock split acting as a catalyst for a quasi-breakout.

Stock splits had gone out of favor in recent decades, though Apple recently announced it’ll split four-for-one. But some investors like the idea of buying a bigger number of a “cheaper” stock, even if the dollars invested are the same. More tangibly, the Tesla stock split makes options trading easier.

In any case, shares rebounded above their 21-day moving average and the 1,500 level. Tesla crossed a short trend line starting with the July 13 intraday peak of 1,794.99, and cleared its short-term trading range of the past few weeks. So, TSLA stock has flashed several possible aggressive entries.

Investors could take a new position or add a few shares here, but don’t get too exposed. With Tesla rising again early Thursday, it’s already looking somewhat extended. If you’re going to be aggressive with stock buys, you have to be quick to sell as well.

Bulls are still betting that Tesla stock will join the S&P 500 index. That could come at any time, or weeks ahead.

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