Dow Jones Futures: Two 99 Composite Rating Stocks Just Entered Buy Zones, But This Is Lacking
Dow Jones futures fell solidly Thursday morning, along with S&P 500 futures and Nasdaq futures, ahead of earnings reports today from Netflix (NLFX), American Express (AXP) and other top names. The major averages rose modestly in Wednesday’s stock market, with the Dow Jones leading on Goldman Sachs stock soaring on earnings; the S&P 500 and Nasdaq faded to close in stalling days. Veeva Systems (VEEV) and Epam Systems (EPAM) both cleared early entries on Wednesday. But Veeva stock and Epam stock rose in below-average volume, signaling a lack of conviction.
Epam stock and Veeva stock both boast best-possible 99 IBD Composite Ratings. All-time stock winners often have Composite Ratings of at least 95 near the start of their runs. Veeva stock also is on the IBD 50 list and on Leaderboard.
Dow Jones Futures Today
Dow Jones futures fell 0.5% vs. fair value. S&P 500 futures lost 0.5%. Nasdaq 100 futures sank 0.7%. Remember that overnight action in Dow futures and elsewhere doesn’t necessarily translate into actual trading in the next regular session.
China’s Commerce Department confirmed that Vice Premier Liu He will travel to D.C. for trade talks on Jan. 30-31.
Much of Thursday’s stock market focus will come after the close, when Netflix stock, American Express and some other top stocks report. Morgan Stanley (MS) does report before the open.
Stock Market Rally Update
The stock market rally continued, with Goldman Sachs (GS), Bank of America (BAC) and Charles Schwab (SCHW) earnings lifting financials. The Dow Jones rose 0.6% and the S&P 500 rose 0.2%, both nearing the 50-day line. The tech-heavy Nasdaq, which cleared its 50-day on Tuesday, advanced nearly 0.2%, though well off intraday highs. The price action and the higher volume triggered stalling days for the S&P 500 index and Nasdaq, which count as distribution days.
Where Are The Top Stocks In Buy Zones?
As noted in other Stock Market Today columns and The Big Picture, the stock market rally looks healthy, with the paucity of top stocks breaking out of bullish bases the only real concern. It’s not a red flag for now, especially given the sharp sell-off in the fourth quarter and especially in December. A few leaders have cleared buy points. Many others are moving bullishly toward entry points, while others are finishing up bases or carving handles. If the stock market rally continues to advance, a large number of top stocks seem poised to clear entries.
Veeva stock rose 0.3% to 101.69, just enough to clear a 101.49 early-entry buy point after briefly doing so on Tuesday. But shares closed near session lows after hitting 104.69 intraday. Also, Veeva stock’s daily volume was 20% below normal. Investors should look for stocks breaking out in volume that’s at least 40% to 50% above average, and the higher the better. You want to make sure big institutions are driving a top stock’s breakout.
The Veeva stock chart does resemble a double-bottom base, and one could make that case. But IBD is labeling 109.15 as the conventional entry.
Epam stock rose 1.4% to 135.17, sneaking past a 134.88 early entry. As with Veeva stock, Epam resembles a double bottom in some respects. The conventional entry for Epam stock is 144.29.
Volume was just below average for Epam stock.
Netflix, American Express Earnings On Tap
FANG stock Netflix and Dow Jones component American Express are among Thursday’s notable earnings reports.
Netflix stock has surged 52% from its Dec. 26 intraday low. That includes Tuesday’s 6.5% pop on subscription price hikes fueling that day’s tech-heavy stock market rally. Netflix earnings per share, excluding items, are expected to fall 39% to 25 cents, according to Zacks Investment Research. Revenue should soar 28% to $ 4.208 billion. Netflix had forecast adding 9.4 million subscribers in the quarter. Subscriber growth and guidance are often the key metrics for the internet streaming giant.
Netflix stock is on the IBD 50, like Veeva stock.
American Express stock broke out in late November, but peaked on Dec. 3 with the broader market and then sold off powerfully. Shares have rebounded somewhat but are still below their 50-day and 200-day lines. American Express stock is the first payments firm to report for the current earnings season, though others have been performing better.
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