Dow Jones futures will not begin trading until Sunday evening, along with S&P 500 futures and Nasdaq futures. The stock market rally had a strong week, with the Dow Jones and Nasdaq composite both hitting record highs. But there is a disconnect between the robust, secure action in the major indexes vs. some more speculative names and high bullish sentiment.
Apple (AAPL), CrowdStrike (CRWD), Nio (NIO) and Zoom Video Communications (ZM) are four stocks to watch this week.
CrowdStrike and Zoom Video stock report earnings this week, while Tesla (TSLA) rival Nio will likely report monthly deliveries. Apple stock is simply the ultimate megacap, with a valuation of $1.98 trillion.
Broader Stock Market Impact
All four are important in their own right, but they also have a broader stock market impact.
Zoom Video earnings and guidance on Monday night, and ZM stock reaction, will be key as looming coronavirus vaccines loom over stay-at-home stocks.
CrowdStrike stock is perhaps the top cybersecurity play right now. But it’ll share the spotlight Wednesday night with two other leading security software names: Zscaler (ZS) and Okta (OKTA). All have cleared early entries. Their results and guidance will be important for the cybersecurity group and cloud software broadly.
Nio stock is the biggest of the Chinese electric car startups. Can Nio can continue to show strong month-to-month growth, satisfying lofty investor expectations? Is there room for all the hot EV stocks to keep growing fast in China? Xpeng Motors and Li Auto (LI), both 2020 IPOs, also may release monthly deliveries next week, along with the more-established BYD Co. (BYDDF). Industrywide data, including Tesla production and deliveries, will likely be released the following week.
Apple stock could move markets, especially if other slumbering megacaps like Microsoft (MSFT) and Amazon.com (AMZN) follow suit. A revived Apple also could buoy leading iPhone chipmakers Qorvo (QRVO) and Qualcomm (QCOM), both of which are near buy points.
Tesla stock is on IBD Leaderboard. Apple stock is on the Leaderboard watchlist. CrowdStrike stock is on SwingTrader.
Dow Jones Futures Today
Dow Jones futures will reopen at 6 p.m. ET on Sunday. So will S&P 500 futures and Nasdaq 100 futures.
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 cases worldwide reached 62.54 million. Covid-19 deaths topped 1.45 million.
Confirmed coronavirus cases in the U.S. have hit 13.60 million, with deaths above 272,000.
However, actual U.S. Covid-19 infections reached 52.9 million at the end of September and could be nearly 100 million now, according to a model developed by the Centers for Disease Control and Prevention. The model assumes most coronavirus cases are mild or asymptomatic and are never tested.
Los Angeles County announced a new stay-at-home order Friday as coronavirus cases soar in the nation’s most populous county. The three-week order, starting Monday, bans most gatherings and limits capacity in retail stores and other non-essential businesses to 20% occupancy.
Meanwhile, the U.K. reportedly will OK the Pfizer (PFE) and BioNTech (BNTX) coronavirus vaccine in a few days, with the first vaccinations by Dec. 7. The FDA is expected to approve the Pfizer-BioNTech vaccine by mid-December, with the Moderna (MRNA) coronavirus vaccine also winning approval around that time. The European Union expects to OK vaccines by year-end.
The U.K. and EU may OK the AstraZeneca (AZN) coronavirus vaccine before year-end, but the U.S. may be weeks later.
Stock Market Rally Last Week
U.S. Stock Market Today Overview
|Russell 2000|| (IWM)||184.42||+0.83||+0.45|
|IBD 50|| (FFTY)||39.32||+0.59||+1.52|
Last Update: 1:24 PM ET 11/27/2020
The stock market rally had a strong week, with the Dow Jones and Nasdaq composite both hitting record highs and the S&P 500 index on the cusp of all-time levels.
The Dow Jones Industrial Average rose 2.2% in last week’s stock market trading. The S&P 500 index climbed 2.3%. The Nasdaq composite gained nearly 3%.
Among the best ETFs, the Innovator IBD 50 ETF (FFTY) boasted a 2.6% advance last week. The iShares Expanded Tech-Software Sector ETF (IGV) rose 2.85%. The VanEck Vectors Semiconductor ETF (SMH) climbed 3.2%. The Renaissance IPO ETF (IPO) surged 10.1%.
Zoom Video Stock
Zoom Video stock jumped 7.3% last week after an 8.9% rally in the prior week. On Friday, shares broke a rather-steep downtrend, but closing just below its 50-day line. A move above the 50-day would offer a buying opportunity, but not until after Zoom Video earnings Monday night.
Guidance, and any comments about a post-coronavirus world, will be key. It’ll also may move other pure stay-at-home plays such as Peloton (PTON) as well as cloud software names generally.
CrowdStrike stock climbed 3.5% last week to 150.83. It’s close to an official 154 buy point. It already triggered an early entry on Nov. 19, when CRWD stock rebounded from its 50-day line and broke above its 50-day line. It cleared another entry at 144.39. CrowdStrike earnings are due Wednesday night, along with Zscaler and Okta, which are also above early entries.
Nio is likely to report monthly delivery figures late next week. For the past few months, Nio has released monthly figures on the second or third day of the following month. Production and deliveries have been rising dramatically. That’s also true for Xpeng Motors and Li Auto, thought starting from a lower base. BYD is among the very largest EV makers in China.
Investors are betting the Nio growth will remain strong. Nio stock has surged 247% since its late October breakout and a whopping 1,551% since May 22. Xpeng and Li Auto stock are up 327% and 243%, respectively, from their late summer IPO prices.
In early 2021, Tesla will begin deliveries of the made-in-China Model Y, with the VW ID.4 coming out at about the same time. EV production in China is set to skyrocket.
Nio stock is 8.9% above its 10-day line. So while a pullback, even to the 50-day line, wouldn’t be a surprise, Nio isn’t flashing extreme risks of a near-term retreat that new IPOs Corsair Gaming (CRSR) and Palantir (PLTR) did last week. Xpeng stock is up 18% from its 10-day line and Li Auto just 3.9%.
Tesla stock is up 17.8% from its 10-day line. That’s not extreme. Also, it comes shortly after a powerful breakout, when hot stocks often can be bolt from moving averages without raising concerns for a while.
Apple stock actually fell 0.6% last week, though it pared losses and moved back above its 50-day line after tumbling 3% on Monday. The relative strength line for Apple stock has been drifting lower for a few months, much like Amazon and Microsoft. These megacaps are entitled to take a rest after a long run of outperformance. That could continue for some time.
Apple stock rising would provide a further lift to the market rally. It would be a good sign for Apple iPhone chipmakers such as Qorvo and Qualcomm stock. Both offer tight entries.
Stock Market Outlook
Judging by the major indexes and many leading stocks, the expectation would be for the stock market rally to continue higher. After a few weeks of sector rotation, the gains were broad-based, with stay-at-home stocks like Zoom Video rebounding while real economy names such as Boeing (BA), Caterpillar (CAT) and JPMorgan Chase (JPM) kept advancing. Yet the major indexes are just clearing consolidations going back to early September.
But by some measures, the market is getting excessively bullish. The bulls vs. bears reading, measuring investment newsletter writers’ sentiment, shot up to 64.6%, the highest since January 2018. Readings over 60% often signal at least a short-term top is underway. Meanwhile, the action in some new IPOs, as well as electric car stocks (some overlap with Li Auto and Xpeng stock), also suggest a bit of speculative mania. That can continue for a lengthy period, but it does add to the risks.
If Apple stock and other megacaps gained momentum, that would fuel further market gains and bullish sentiment, perhaps hastening a pullback. So in the current climate, perhaps the stock market rally needs lukewarm action from tech giants to keep from overheating.
What You Should Do Now
As always, you should analyze your stocks, with a special emphasis on your winners. How extended are they from moving averages. You may want to consider partial profits on stocks that have been going nearly vertical for some time.
There aren’t a lot of good-looking setups right now, with some of the promising-looking stocks ready to report earnings, like CrowdStrike stock. So cast a wide net for your watchlists.
Read The Big Picture every day to stay in sync with the market direction and leading stocks and sectors.
Please follow Ed Carson on Twitter at @IBD_ECarson for stock market updates and more.
YOU MAY ALSO LIKE:
Why This IBD Tool Simplifies The Search For Top Stocks
Catch The Next Big Winning Stock With MarketSmith
Best Growth Stocks To Buy And Watch
IBD Digital: Unlock IBD’s Premium Stock Lists, Tools And Analysis Today
Two Apple Chipmakers Lead 5 Stocks Near Buy Points