Dow Jones Futures: Apple, Tesla Test Support As JPMorgan, Caterpillar Break Out; Six Key Earnings Late

Dow Jones futures fell modestly Tuesday night, along with S&P 500 futures and Nasdaq futures, with Apple (AAPL) and Tesla stock nearing key support.

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SolarEdge Technologies (SEDG), Exact Sciences (EXAS), QuantumScape (QS), Crispr Therapeutics (CRSP), Cornerstone OnDemand (CSOD) and RingCentral (RNG) were notable earnings after the close.

Shopify (SHOP) and lithium miner Albemarle (ALB) are key results before Wednesday’s open.

Rising interest rates and economic prospects fueled financials and cyclical names, with Dow Jones giants JPMorgan Chase (JPM) and Caterpillar (CAT) clearing buy points. But rising rates weighed on many growth stocks.

Apple stock and Tesla pulled back toward their 10-week moving averages. A rebound from those levels could offer an early entry, though investors might want to wait for a little more strength.

IBD Stock Of The Day: Dow Giant Breaks Out On Economic Outlook

SolarEdge stock rose on strong earnings and guidance. Exact Sciences stock fell mixed results. QuantumScape stock climbed and Crispr stock tilted lower after the development companies reported big losses. RingCentral stock fell despite strong results and targets. Cornerstone stock surged, signaling a breakout on its results.

Apple and Tesla stock are on IBD Leaderboard. CAT stock is on SwingTrader.

Dow Jones Futures Today

Dow Jones futures were 0.1% below fair value. S&P 500 futures dipped 0.2%. Nasdaq 100 futures fell 0.3%.

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

Join IBD experts as they analyze actionable stocks in the stock market rally on IBD Live.

Coronavirus News

Coronavirus cases worldwide reached 110.02 million. Covid-19 deaths topped 2.42 million.

Coronavirus cases in the U.S. have hit 28.38 million, with deaths above 499,000.

Stock Market Rally Tuesday

The stock market rally began the holiday-shortened week with the major indexes hitting record highs, but they soon turned mixed.

The Dow Jones Industrial Average rose 0.2% in Tuesday’s stock market trading. The S&P 500 index lost a fraction. The Nasdaq composite dipped 0.3%. The 10-year Treasury yield jumped to its highest level since February 2020.

Dow Stocks In Focus

JPMorgan stock climbed 2.1% to 114.65, clearing a 142.85 buy point from a 13-month cup-with-handle base. With short-term rates still near record lows, JPMorgan and other banks are benefiting from widening yield spreads, expending net interest margins.

Caterpillar stock rose 2.2% to 202.38, above a 200.27 buy point from either a short consolidation or a three-weeks-tight pattern. Investors could have bought CAT stock on Feb. 2, as it rebounded from its 50-day line, reclaimed its 21-day line and broke a downtrend. Caterpillar stock was Tuesday’s IBD Stock Of The Day.

Apple stock, also a Dow Jones component, fell 1.6% to 133.19, nearly touching its 10-week moving average. Investors could buy Apple stock as it rebounds from that level, especially if retakes its 21-day line and perhaps last week’s high of 137.88. A 138.89 cup-with-handle entry is still valid, while AAPL stock could be working on a new consolidation starting with its Jan. 25 record high of 145.09.

After the close, Berkshire Hathaway (BRKB) disclosed it cut its Apple by 6% in the fourth quarter. Apple stock is still the largest individual stock holding in Warren Buffett’s Berkshire. Berkshire also sold out of JPM stock.

Tesla Stock

Tesla stock sank 2.4% to 796.22 coming within 1% of its 10-week line. That’s probably close enough for investors to take a position, though they might want to wait for TSLA stock to retake its 21-day line. Shares could be in the process of forming a new base. Note that Tesla stock in the past few weeks has had down weeks in heavier volume than in up weeks.

Just as 50-day/10-week line rebound can offer buying opportunities, a decisive break of the 10-week line can be strong sell signal.

Some big institutional investors pared Tesla stock holdings in the fourth quarter, according to new 13F filings with the SEC. But Citadel Securities began a notable TSLA stock investor.

Growth Stocks Mixed

Among the best ETFs, the Innovator IBD 50 ETF (FFTY) fell 0.5%, while the Innovator IBD Breakout Opportunities ETF (BOUT) advanced 0.35%.  The iShares Expanded Tech-Software Sector ETF (IGV) dipped 0.3%. The VanEck Vectors Semiconductor ETF (SMH) rose 0.6%.

Read The Big Picture every day to stay in sync with the market direction and leading stocks and sectors.

Key Earnings

SolarEdge earnings were better than expected, while the solar power play also gave bullish guidance. SolarEdge stock rose 3% in extended trade. Investors could buy SEDG stock as long as its within 10% of the 10-week line. There’s also a potential breakout from a consolidation with a 377.10 entry. SEDG stock edged up 0.15% to 331.35 on Tuesday.

Exact Sciences reported a wider-than-expected loss but beat on revenue. Exact Sciences stock sank 4% overnight. The cancer diagnostics testing leader been trading near highs in messy action. EXAS stock dipped 0.5% to 154.28 on Tuesday.

QuantumScape reported a deep loss on no revenue in its first results since the solid-state battery maker went public. QuantumScape stock popped 4% overnight. That came after QS stock fell 7.3% on Tuesday, trading well below its 50-day line.

Crispr also delivered a big loss for the gene-editing leader. CRSP stock lost a fraction late. Crispr stock fell 3.6% on Tuesday, once again hitting resistance at its 50-day line.

RingCentral earnings beat views while the communications software maker also guided higher. But RNG stock retreated 4% in overnight trade. RingCentral stock fell 1.4% to 437.02 on Tuesday, extended from a recent base.

Cornerstone earnings crushed views while sales also topped. CSOD stock spiked 16% overnight, signaling a gap out of a bottoming base. Cornerstone stock fell 2.4% to 46.26 on Tuesday, back below a 46.92 buy point.

Stock Market Rally Analysis

The Nasdaq is now 7.1% above its 50-day moving average, still somewhat extended but down from Friday’s 7.7% or Feb. 8’s 8.1%. The stock market rally has been flashing warning signs for several weeks, from the extended Nasdaq, to investor exposure to the share of stocks above their 50-day and 200-day moving average. But so far the market have shrugged off those concerns, with only short-lived pullbacks in recent months.

Investors don’t need to be defensive, but they should consider how much exposure they have. They should be prepared for a market pullback, with a game plan for scaling out of holdings.

Please follow Ed Carson on Twitter at @IBD_ECarson for stock market updates and more.

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