Dow Jones Futures: Is The Stock Market Rally Ready For A Melt Up? Analyzing Apple, Amazon, Palantir

Dow Jones futures will open Sunday evening, along with S&P 500 futures and Nasdaq futures. The stock market rally continues to shrug off warning signs, with the major indexes hitting fresh record highs.

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The market is at heightened risk of a pullback, but investors should also be on watch for the major indexes and leading stocks to rev higher. A melt-up phase means rapid portfolio gains, but the end usually comes even faster.

So this is a time for investors to stay alert and be prepared so you can act decisively.

One possible trigger for a melt-up would be if tech titans Apple (AAPL), Adobe (ADBE) and Amazon stock lead or at least join the market rally. Apple stock has held up the best, but Amazon.com (AMZN) and Adobe are also close to possible buy points.

Meanwhile, Palantir Technologies (PLTR) and Zoetis (ZTS) are notable earnings reports early Tuesday.

Apple and Palantir stock are on IBD Leaderboard. Adobe stock and Zoetis are IBD Long-Term Leaders.

Dow Jones Futures Today

Dow Jones futures will open at 6 p.m. ET on Sunday, along with S&P 500 futures and Nasdaq 100 futures.

Futures will trade for much of Monday as well, but U.S. stock exchanges will be closed for the Presidents Day holiday.

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 108.71 million. Covid-19 deaths topped 2.39 million.

Coronavirus cases in the U.S. have hit 28.10 million, with deaths above 492,000.

Stock Market Rally Last Week

The stock market rally continued with solid gains last week after the prior week’s powerful rebound.

The Dow Jones Industrial Average rose 1% in last week’s stock market trading, after a 3.3% gain in the prior week. The S&P 500 index climbed 1.2% after a 4.65% jump in the week before. The Nasdaq composite rallied 1.7% last week, building on a 6% surge.

Growth stocks had a strong week.

Among the best ETFs, the Innovator IBD 50 ETF (FFTY) rallied 5.5%, while the Innovator IBD Breakout Opportunities ETF (BOUT) climbed 2.9%.  The iShares Expanded Tech-Software Sector ETF (IGV) advanced 2.3%. The VanEck Vectors Semiconductor ETF (SMH) soared 8.2% in a huge week for many chipmakers and equipment makers.

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

Palantir Earnings

Analysts expect Palantir earnings per share of 2 cents vs. a 3-cent loss a year earlier. Revenue grew 31% to $300.7 million. Palantir stock fell 6.3% to 31.91 last week, falling back below a 33.60 buy point for a second straight time. It’s not what a valid buy point would be.

Zoetis Earnings

Wall Street forecasts Zoetis earnings to fall 7% to 86 cents a share. The animal drug giant’s sales should rise 4% to $1.74 billion

Zoetis stock rose 4.8% to 166.87 last week, retaking its 50-day moving average. In the prior week, ZTS stock rebounded from its 200-day line. Shares are closing in on a 170.59 double-bottom buy point, according to MarketSmith analysis. Zoetis stock arguably closed right on a trend line starting with the early November peak.

Apple Stock

 Apple stock fell 1% last week to 135.37, with volume drying up. But it continues to close just above its 21-day line — the green line in chart provided — after rebounding from its 10-week line in the prior week. The 138.89 cup-with-handle buy point remains valid. But AAPL stock could be working on a new consolidation based off the Jan. 25 peak of 145.09.

Amazon Stock

Amazon stock fell 2.2% last week to 3,277.71, but found support at its 50-day line Friday, finishing just above the 21-day. Volume has been light over the last several sessions. AMZN stock now has a handle with a 3,434.10 buy point.

 Adobe Stock

Adobe stock rose 1.4% last week to 498.84. Two weeks ago, ADBE stock rebounded from its 40-week line and retook its 50-day and 10-week lines. At 3% above its 10-week line, investors looking to buy Adobe as a Long-Term Leader could do so here. But they might want shares to clear the late December peak, using 507.02 as an early entry. Adobe stock also has another early entry at 519.70, with 536.98 as the official buy point.

Market Rally Extended

After a solid gain Monday, it looked like the stock market rally might move sideways, with a slight upward bias. Friday’s final-hour push signaled that the market clearly is moving higher.

The Nasdaq closed the week 7.7% above its 50-day line, even with Apple and Amazon stock retreating. That’s off Monday’s 8.1% and the Jan. 25’s 8.2%, but it’s still notably extended.

In addition, investor leverage, low volatility readings, frothy climax-type action in GameStop (GME), Tilray (TLRY) and more all point to a heightened risk of at least a pullback.

But, like the boy who cried wolf — or bear? — investors have heard multiple times in the past few weeks of warning signs. There have been some pullbacks in the current rally, but they have been modest and short-lived, even the late January retreat.

In most cases, ignoring warning signs and being invested deep on margin would have paid off in recent weeks.

But investors have to be ready for a pullback, and the possibility that the pullback is more deeper and longer lasting. You don’t want to sitting on your hands, waiting for a market correction before taking action.

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Stock Market Melt Up?

But perhaps the stock market rally isn’t getting ready for a pullback, but is ready to rush higher.

A stock melt-up could be coming, like the late August-early September frenzy. A melt-up can be a final windfall for growth investors, with big gains in short periods. However, investors must be vigilant and decisive.

On Aug. 17, the Nasdaq cleared a mini-consolidation to a new high, closing 7% above its 50-day line. So it was already extended. But the composite, led by Apple, Tesla and Salesforce.com (CRM) and Zoom Video (ZM), didn’t retreat or pause, but surged 8.5% from that point to the Sept. 2 intraday peak. Many growth stocks enjoyed much-bigger gains. It was a good time to be invested.

But the end came even faster. By the Sept. 2 close, the Nasdaq was 11.6% above its 50-day line.

The next day the Nasdaq tumbled 5%. After 3 days, the Nasdaq was down 10% and below its 50-day line, wiping out a month’s worth of gains.

Growth stocks often will fall much harder than the market. Tesla stock plunged 26% in those three sessions — and that’s after skidding 10% in the prior two days.

So if the stock market rally does pick up steam in the coming days, investors should look to sell into strength and have a game plan for scaling out quickly when selling picks up.

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The Stock Market Is Not A Video Game

While more investors are treating the stock market like a video game, it is not. This is your retirement savings or your kids’ college funds. It’s always important to stay engaged with the market and analyzing your holdings. But that’s especially true under current market conditions.

Remain flexible. Don’t try to predict what the market is going to do or be stubborn if a trade goes against you. Pay attention to what the major indexes and leading stocks are saying and be ready to shift gears.

The market is going to do what it’s going to do. The stock market rally may melt up or down, but it could also move sideways. An extended pause or gradual pullback — or a market correction — would replenish the shallow pool of actionable stocks.

But keep working on your watch lists, looking for stocks carving new bases or finding bullish support.

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

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