S&P 500, Dow Jones Futures Point To Losses; Visa, Square Lead These 5 Stocks Reclaiming This Key Support
Futures for the S&P 500 index, Dow Jones industrial average and Nasdaq 100 fell modestly Tuesday morning.
X On Monday, The S&P 500 index, Dow and Nasdaq composite closed with solid gains, with some notable stocks reclaiming support at the 50-day moving average. We’ll take a look at a few of them: Dow component Visa (V), Square (SQ), Salesforce.com (CRM), Intuitive Surgical (ISRG), U.S. Steel (X) and SPDR S&P Biotech (XBI).
Monday’s rally built on Friday’s solid rebound following the S&P 500 index’s intraday test of its 200-day moving average. While two is better than one, this is still a stock market correction.
Wait for further evidence of a rebound before jumping back in. Follow the action of the major averages and leading stocks, reading the Stock Market Today columns and The Big Picture every day.
Create a watch list. Look for top-rated stocks with high relative strength lines and those finding support at key levels. That’s where Visa, Square and the other stocks discussed in the article come into play.
S&P 500 index futures fell 0.5% vs. fair value. Dow Jones futures lost 0.5%. Nasdaq 100 futures retreated 0.5% vs. fair value.
Just as a couple of good market days don’t confirm an uptrend, one down day wouldn’t doom a rally attempt so long as the major averages hold above last Friday’s intraday lows.
Visa shares rose 1.85% to 118.47 in Monday’s trading, comfortably retaking the 50-day moving average in volume that was 12% above normal. The relative strength line, which tracks a stock’s performance vs. the S&P 500 index, has been trending gradually up since the end of 2016. Visa’s RS line — the blue line in the chart below — is at all-time highs.
Visa peer Mastercard has been faring even better. Mastercard never closed below its 50-day line and its RS line is at record highs.
Square edged up 0.9% to 39.92, just creeping above its 50-day line in volume that was well below normal. Square rebounded on Friday, but just closed higher. That continues a pattern this month of underperforming the S&P 500 index, pushing its RS line lower.
Square had a quasi-climax run in November, reflecting the payment firm’s tangential Bitcoin ties. It can take a while for a stock to recover from such blowoff moves, but not always.
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Salesforce stock climbed 1.5% to 108.55 in volume that was just above average, following a 2.8% bounce Friday. The RS line is not at record highs, but not far below.
Intuitive Surgical rose 1.3% to 398.51 in quiet trade Monday. The RS line has been trending down since the stock peaked on Jan. 25, just ahead of earnings that night and the stock market’s Jan. 26 top.
U.S. Steel shot up 5.8% to 36.22 in trade that was 16% above normal. The RS line is still below its late-January peak, a 10-month best. Steelmakers rallied Monday as President Trump unveiled his $ 1.5 trillion infrastructure plan, which would involve $ 200 billion in federal funds to kick-start private, state and local projects.
SPDR S&P Biotech
The biotech ETF gained 2% to 88.79 on Monday, regaining its 50-day line easily. XBI edged higher Friday after plunging intraday. The RS line is modestly below October’s two-year high.
XBI’s main rival, iShares Nasdaq Biotech, advanced 1.6% on Monday, retaking its 200-day line. XBI and IBB are among the biotech ETFs performing well in 2018.
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