Dow Jones Futures: These 5 Top Stocks Are Just Below Buy Points
Dow Jones futures were little changed Wednesday morning, along with S&P 500 futures and Nasdaq futures. The 2019 stock market rally ended its recent pause — with a bang. The Nasdaq composite surged 1.7% in higher volume, staging its own follow-through day while closing above its 50-day line for the first time since Oct. 3. The S&P 500 index and Dow Jones also enjoyed solid gains. Meanwhile, Veeva stock, Broadcom stock, Vertex stock, Dollar General stock and Fabrinet stock are all within 2% of buy points.
Veeva Systems (VEEV) and Broadcom (AVGO) actually cleared buy points intraday Tuesday, only to close below those entries. Vertex Pharmaceuticals (VRTX), Dollar General (DG) and Fabrinet (FN) all moved into buy zones over the past week, but have pulled back slightly.
Dow Jones Futures Today
Dow Jones futures fell less than 0.1% vs. fair value. S&P 500 futures lost a fraction. Nasdaq 100 futures were just above break-even. Remember that overnight action in Dow futures and elsewhere doesn’t necessarily translate into actual trading in the next regular session.
Bank of America earnings topped views, sending shares sharply higher in the premarket. United Airlines jumped after releasing strong earnings and guidance late Thursday.
2019 Stock Market Rally: More Confirmation
First, the Nasdaq rose 1.7% in higher volume than on Monday, showing sufficient strength to qualify as its own follow-through day.
The S&P 500 index staged a follow-through day on Jan. 4, confirming the 2019 stock market rally. Still, it’s nice to have the other major averages provide further evidence that a rally has staying power.
The Nasdaq composite also cleared its 50-day moving average, something it’s been unable to do since Oct. 3. The Nasdaq tried and failed to close above the 50-day line on Dec. 3, leading to a market meltdown over the next three weeks.
The Next Stock Market Rally Test
As the latest The Big Picture makes clear, the 2019 stock market rally continues to build strength, but investors need to see more growth stocks breaking out of bullish bases. First and foremost, to offer buying opportunities, but also to provide further confirmation for the stock market rally itself.
Top Stocks Near Buy Points
All five stocks below qualify as potential leading stocks. Three of these top stocks are on IBD Leaderboard. Veeva stock and Broadcom are on the IBD 50 list. Veeva stock has a best-possible 99 IBD Composite Rating. Broadcom stock and Vertex stock have 98 Composite Ratings, with Dollar General at 92 and Fabrinet at 89.
Veeva stock rose 4.3% to 101.41, closing just below a 101.49 early entry after rising as high as 102.35 intraday. Volume was 52% above normal, which signals institutional support for the medical software standout. The relative strength line, which tracks a stock’s performance vs. the S&P 500 index, has been hitting new highs. The RS line is in blue in the charts below.
Broadcom stock gained 2.2% to 256.49, but intraday shot up to 262.22, briefly clearing a 261.69 handle buy point in a yearlong consolidation. Volume was just below average for the chip stock. Broadcom stock is about 2% from the entry point. The RS line is moving back toward late December’s 52-week high.
Vertex stock rose 1.5% to 186.68, closing just below a 187.86 buy point from a double-bottom base. The biotech cleared the entry on Friday, but dipped back below it on Monday. Vertex stock’s RS line is right at record highs.
Dollar General Stock
Dollar General stock fell 0.8% to 112.16, its third straight decline and the second in modestly higher volume. The specialty discounter this week has undercut its 113.25 buy point from an awkward-looking double-bottom base. But it’s still less than 1% from that entry. However, Dollar General stock could be in the process of forming a handle that would offer a slightly higher entry.
Fabrinet stock climbed 0.8% to 54.62, pennies below a 54.80 entry from a flat base within a base-on-base pattern. On Jan. 10, Fabrinet stock broke out in strong volume, but fell back below the entry on Monday.
Fabrinet is a contract manufacturer specializing in optical products. Its earnings have been spotty, but rose 23% in the latest quarter and are expected to show a 28% gain for the December period.
Fabrinet was a recent IBD Stock of the Day.
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