Dow Jones futures and S&P 500 futures rose slightly Thursday morning, while Nasdaq futures fell slightly. President-elect Joe Biden is expected to outline a massive new stimulus package Taiwan Semiconductor (TSM) reported mixed results early Thursday but rose on upbeat guidance. Delta Air Lines (DAL) also is due before the open.
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Tesla (TSLA) fell modestly after safety regulators asked the EV maker to recall many Model S and Model X vehicles for a problem with the cars’ touchscreens.
On Wednesday, the stock market rally enjoyed modest gains, as Apple stock and Intel (INTC) led big-cap techs. The House impeached President Donald Trump late Wednesday.
Apple (AAPL) flashed early buy signals Wednesday, as tech giants showed some signs of life, though that’s not entirely good news for the stock market rally. Apple iPhone and 5G chipmaker Qualcomm (QCOM) also is offering an early entry slightly below the official buy point.
Meanwhile, new IPOs Airbnb (ABNB), DoorDash (DASH), Duck Creek Technologies (DCT) and ContextLogic (WISH) broke out or triggered buy signals.
Apple, AMD and TSM stock are on IBD Leaderboard. Apple stock is on SwingTrader. AMD stock, Taiwan Semi, AMAT and LRCX are on the IBD 50.
Biden Stimulus Plan
President-elect Biden is expected to unveil his new economic stimulus plan today. It’s seen being more than $1 trillion, including a big expansion of the child tax credit. Biden is urging Congress act swiftly. A wider spending package, perhaps on health care on infrastructure, might come later in the year. That might include some tax hikes.
House Impeaches Trump
The House voted to impeach President Trump, with 10 Republicans joining Democrats. The Trump impeachment vote was on the president’s alleged “incitement of insurrection,” referring to the pro-Trump mob storming the Capitol building on Jan. 6. Senate Majority Leader Mitch McConnell said he won’t recall the Senate for a quick Trump impeachment trial. That means a Senate impeachment trial would have to wait until Joe Biden is president.
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Dow Jones Futures Today
Dow Jones futures rose 0.3% vs. fair value. S&P 500 futures climbed 0.2%. Positive Johnson & Johnson coronavirus vaccine news gave a slight lift to S&P 500 and Dow Jones futures.
Nasdaq 100 futures fell less than 0.1%.
In other news, Virgin Galactic (SPCE) jumped overnight as Cathie Wood plans an Space ETF for ARK Funds.
Tesla (TSLA) fell 1.5% after safety regulators asked the electric vehicle maker to voluntary recall 158,000 Model S and Model X vehicles for media control unit failures that lead to touch screen displays not working, creating several safety hazards. The NHTSA letter is unusual, likely meaning that Tesla has rebuffed regulators’ request for a recall.
Remember that overnight action in Dow futures and elsewhere doesn’t necessarily translate into actual trading in the next regular stock market session.
Taiwan Semiconductor Earnings
Taiwan Semiconductor earnings rose 29% to 97 cents a share, beating views by 3 cents. Revenue rose 22% to $12.68 billion, missing views for $12.85 billion.
TSM sees Q1 revenue of $12.7 billion to $13 billion, above analyst consensus. It sees capital spending of $25 billion to $28 billion in 2021.
Taiwan Semiconductor is the world’s largest chip foundry, making chips for Apple, and many more. TSM stock is benefiting from multiple tailwinds: a chip cycle uptrend, a big Apple iPhone cycle and Taiwan Semi’s technological lead over Intel (INTC) and others.
Taiwan Semiconductor earnings could offer a signal of demand for customers like Apple and AMD. The capital spending forecast is important for Applied Materials (AMAT), ASML (ASML), Lam Research (LRCX) and other chip-equipment makers.
TSM stock rose 3% in early trading Thursday. On Wednesday, shares fell 3.1% to 119.23, likely on the Intel CEO news.
Intel CEO Bob Swan Out
Intel stock spiked 7% Wednesday on news that CEO Bob Swan will exit Feb. 15, replaced by Pat Gelsinger, CEO of virtualization software maker VMware (VMW) and once Intel’s technology chief. The Dow tech giant said fourth-quarter earnings and sales will exceed its guidance, adding that it’s made progress on its 7-nanometer chips.
Advanced Micro Devices (AMD) sank 3.75%, once again testing support at the 10-week line. VMware stock and parent Dell Technologies (DELL) fell 6.8% and 7.2%, respectively.
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Coronavirus News
Coronavirus cases worldwide reached 92.87 million. Covid-19 deaths topped 1.98 million.
Coronavirus cases in the U.S. have hit 23.61 million, with deaths above 393,000.
The Johnson & Johnson coronavirus vaccine is safe and produces a strong immune response in young and older recipients, according to early/midstage trial data published in the New England Journal of Medicine.
Earlier, Johnson & Johnson (JNJ) said it expects full efficacy results from late-stage trial of its one-short coronavirus vaccine by the end of January or first week of February. It sees a vaccine rollout in March. That followed reports that JNJ’s Covid vaccine rollout might be delayed.
JNJ stock popped 2% in the premarket after dipping 0.1% on Wednesday, closing still in a buy zone.
Stock Market Rally
The stock market rally generally advanced, with big techs leading the way.
The Dow Jones Industrial Average closed a fraction lower in Wednesday’s stock market trading. The S&P 500 index rose 0.2% and the Nasdaq composite 0.4%. The QQQ ETF, which tracks the big-cap Nasdaq 100, rallied 0.7%.
Apple stock rose 1.6% to 130.89. The Dow Jones, S&P 500 and Nasdaq component is working on a 138.89 cup-with-handle buy point. But on Wednesday, shares rose modestly from its 21-day exponential moving average. It also crossed or touched a downward-sloping trend line in its handle. Those are reasons to start or add a few more shares of Apple stock ahead of a possible future breakout.
Meanwhile, Amazon.com (AMZN), Microsoft (MSFT), Netflix (NFLX) rose slightly.
Qualcomm stock, another big-cap tech, rose 1.9% to 157.42. Shares are in a flat base with an official buy point of 161.17, according to MarketSmith analysis. QCOM stock has been rebounding from its 21-day and 10-week line and is still within range of those lines. Meanwhile, it’s trying to peak last week’s high, another tiny piece of resistance.
On Wednesday, Qualcomm agreed to buy computing startup Nuvia, founded by former Apple chip engineers, for $1.4 billion.
Growth stocks overall lagged.
Among the best ETFs, the Innovator IBD 50 ETF (FFTY) sank 0.8%, while the Innovator IBD Breakout Opportunities ETF (BOUT) edged up 0.3%. The iShares Expanded Tech-Software Sector ETF (IGV) dipped 0.3%. The VanEck Vectors Semiconductor ETF (SMH) fell 0.5%. TSM stock, Intel, AMD and Qualcomm are all top SMH holdings.
IPOs Flashing Buy Signals
Airbnb stock shot up 5.7% to 169.99. Shares hit 178.62 intraday, briefly clearing the 175.07 IPO base buy point. But investors could have bought ABNB stock Tuesday as it topped the Jan. 8 high of 155.54 or as it cleared some resistance Wednesday above Tuesday’s intraday high.
DoorDash stock spiked as high as 215.50 before settling for a 3.2% gain to 198.17. The IPO base buy point is 195.60. But after huge gains over the past several days, DASH stock looks somewhat extended from an initial entry. Investors could have started a position perhaps just above the Dec. 21 high of 173.46.
Duck Creek stock rose 5.5% to 47.39, breaking out above a 46.54 cup-with-handle buy point. Investors also could have bought DCT stock earlier in the week as it broke a downtrend in its deep handle.
ContextLogic stock surged 14% to 23.92. That came up short of the 24.85 official buy point. Investors could have bought WISH stock as it cleared its Jan. 7 high of 21.58. Ideally, WISH stock would consolidate here, forming some sort of handle before truly breaking out.
Delta Earnings
Delta stock is near a buy point, finding support at its 21-day, 50-day and 10-week moving averages. A bullish rebound would provide a buying opportunity. DAL stock also is in a flat base with a 43.86 buy point. Shares nudged up 0.35% to 40.44 on Wednesday.
Analysts forecast Delta to report a $2.41 per-share loss with revenue plunging 67% to $3.83 billion. Airlines face a long road to recovery.
Stock Market Rally Analysis
The Nasdaq composite is now 6.5% above its 50-day line, up slightly from the prior two days but below last Friday’s 8%. Still, if not extended, the Nasdaq is at least almost extended. While it’s positive to see Apple stock and, to a lesser extent, other tech giants try to warm up, the downside is that this could overheat the broader market in a hurry.
Many IPOs, fuel cell names and other speculative or “story” stocks are already on fire.
Bullish sentiment is high. The bulls vs. bears sentiment gauge of investment newsletter writers showed the share of bulls hit 63.7% in the latest week, just below the multiyear highs set in late December. The bears reading of 16.6% matched its recent lows. Readings above 60% are often associated with near-term pullbacks, but not necessarily right away.
However, as long as the stock market rally continues to show strength, investors should take advantage. But keep an eye on the exits.
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