Dow Jones futures were little changed Monday night, along with S&P 500 futures and Nasdaq futures, following another wild session for the stock market rally, with tech leaders advancing. Tesla Battery Day will take center stage Tuesday evening, but Tesla stock fell overnight after Elon Musk signaled that any battery advances won’t hit the road for some time.
Once again, the stock market rallied off lows, especially the Nasdaq. Apple stock, Adobe (ADBE), ServiceNow (NOW), Advanced Micro Devices (AMD) Nvidia (NVDA), Alibaba (BABA), Square (SQ), Veeva Systems (VEEV) and Tesla (TSLA) were tech leaders moving higher.
Apple (AAPL) had a solid gain, nearly reclaiming its 50-day line. Adobe, ServiceNow, AMD, Nvidia, Square, Alibaba and Veeva stock rebounded from around their 50-day or 10-week moving averages, while Tesla stock bounced from its 21-day exponential moving average.
Once again, the stock market rally looked finished in the morning. But once again, the major indexes rebounded off lows. The Nasdaq was especially encouraging, nearly wiping out a 2.5% intraday loss.
Adobe, ServiceNow, Nvidia and Tesla are on IBD Leaderboard, while Alibaba stock is on the watchlist. ServiceNow stock and Adobe are IBD Long-Term Leaders, while Veeva is on the watchlist. AMD stock, Nvidia, Veeva, Alibaba and Adobe are on the IBD 50.
Dow Jones Futures Today
Dow Jones futures fell a fraction vs. fair value. S&P 500 futures and Nasdaq 100 futures were about flat. Remember that overnight action in Dow futures, Tesla stock and elsewhere doesn’t necessarily translate into actual trading in the next regular stock market session.
Coronavirus cases worldwide reached 31.47 million. Covid-19 deaths topped 968,000.
Coronavirus cases in the U.S. have hit 7.04 million, with deaths above 204,000.
Covid-19 cases have picked up in the U.S. in recent days while European cases are surging. Much of that is due to increased testing though. Coronavirus deaths remain low, in part due to improved treatments and procedures.
Coronavirus Stock Market Rally
U.S. Stock Market Today Overview
Last Update: 2:52 PM ET 9/21/2020
The coronavirus stock market rally suffered another losing session, though the action of the Nasdaq and leading techs was encouraging.
Banks, medical services, energy, transportation and hospitality stocks were hardest hit. Bank stocks tumbled on a report documenting how big financials allowed $2 trillion in suspicious transactions over two decades. Health insurers sold off on fears that a new Supreme Court justice could undermine ObamaCare. Energy, transport and leisure names retreated in part on coronavirus concerns.
All the major indexes undercut their recent lows.
The Dow Jones Industrial Average fell 1.8% in Monday’s stock market trading, gapping below its 50-day moving average. The S&P 500 index lost 1.2%. The Nasdaq composite closed down just 0.1%, while the big-cap Nasdaq 100 finished slightly higher.
Apple stock reversed higher for a 3% gain.
Adobe and ServiceNow rallied nearly 2%, not only finding 50-day support but reclaiming buy points. Alibaba edged up just 0.5%, but moved higher after testing its 10-week line and a recent buy point. AMD stock popped 4%, Nvidia 2.7%, Veeva 2.1% and Square stock 4.2%, all finding 10-week support.
Among the best ETFs, the Innovator IBD 50 ETF (FFTY) edged up 0.1%. The iShares Expanded Tech-Software Sector ETF (IGV) rallied 1.8%, with major holdings Adobe and ServiceNow contributing. The VanEck Vectors Semiconductor ETF (SMH) increased just 0.05%, even with the big AMD and Nvidia stock gains.
The CBOE Volatility Index finally rose, after several days of inaction, but still not at levels that would indicate excessive fear. When the market’s fear gauge hits relative highs, it’s a sign of a short-term market bottom.
Tesla Battery Day
In the Tesla Battery Day event late Tuesday the electric car leader is expected to reveal progress on a “million-mile battery” as well as a cheaper, denser battery design and an in-house manufacturing process.
But CEO Elon Musk cautioned late Monday on Twitter that you won’t see battery tech advances in vehicles anytime soon.
Important note about Tesla Battery Day unveil tomorrow. This affects long-term production, especially Semi, Cybertruck & Roadster, but what we announce will not reach serious high-volume production until 2022.
— Elon Musk (@elonmusk) September 21, 2020
Keep in mind that Musk’s promises, especially on future tech advances such as batteries and self-driving capabilities, often are unfulfilled or take make longer than he originally expects.
Other automakers and battery makers presumably will be working on their own battery and powertrain advances in coming years.
Tesla stock fell 6% overnight on the Elon Musk tweet. Shares had closed up 1.6% to 449.39 on Monday after tumbling intraday to 407.07, testing its 21-day moving average. The EV maker has held up much better than most tech giants, though with big intraday, daily and weekly swings.
The overnight swing may be temporary, with Tesla Battery Day providing the catalyst for further TSLA gains. But how much is Battery Day news already priced into Tesla stock? Tesla Battery Day rumors and buzz helped boost shares from their 50-day line after Sept. 8. Expectations for a Battery Day have arguably been a Tesla stock catalyst for nearly a year.
Be wary of post-Battery Day event overnight stock action. Shares could swing one way Tuesday night, then reverse course in Wednesday’s session.
Stock Market Game Plan: Defense
The stock market rally remains in effect, though “under pressure.” While Monday’s tech rebound was encouraging, the fact remains that all the major indexes closed lower. There are a lot of interesting stocks that are acting reasonably well. It’s important to stay engaged and build your watchlists.
But for now, investors should remain defensive. Continue to analyze your holdings and decide which should be held and which should be sold. Consider what you’d do if the Nasdaq fell another 5% or 10%.
What would it take to shift to an offensive mindset? Let’s say the S&P 500 and Nasdaq rally back to their 50-day moving averages. That would be promising, but could also be another head fake to lure investors in before a fresh bout of selling. Investors should largely refrain from making new buys until the Nasdaq is back above its Sept. 10 high.
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.
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