Dow Jones futures, along with S&P 500 futures and Nasdaq 100 futures, turned lower Wednesday, as Bitcoin surged above $52,000. Tesla stock looked to add to Tuesday’s sell-off, while Bitcoin plays PayPal and Square turned mixed ahead of the market open.
Tesla (TSLA) looked to add to Tuesday’s 4.5% drop, falling 0.5% in premarket trade.
Dow Jones Futures Today: Jobs Data Disappoints
Ahead of the stock market open Wednesday, Dow Jones futures were slightly lower, while S&P 500 futures moved down 0.4% vs. fair value. Nasdaq 100 futures fell 0.7% vs. fair value. Remember that trading in Dow Jones futures and elsewhere doesn’t necessarily translate into actual trading in the next regular stock market session.
Early Wednesday, private payrolls increased 117,000 in February, well below the 165,000 Econoday consensus estimate, according to a report from ADP.
“We’re seeing large-sized companies increasingly feeling the effects of Covid-19, while job growth in the goods producing sector pauses,” Nela Richardson, chief economist at ADP, said in a written statement.
The Labor Department will report February’s official jobs data on Friday.
Stock Market Pullback Finds Support
Looking back at the current uptrend, November was a key month for the stock market. IBD’s The Big Picture flagged the new uptrend following the market’s bullish follow-through day on Nov. 4. Meanwhile, the start of March has the Dow Jones Industrial Average, Nasdaq and S&P 500 pulling back from record highs.
Tuesday’s IBD Big Picture cautioned, “While some backtracking was not surprising after indexes made their best gains in months, the market left more to be desired. Indexes slid in the final hour of trading and closed near session lows. That’s uncomfortable action, especially when you study the index charts.”
Amid the stock market pullback, investors should play more defense than offense. Avoid new breakouts, unless they’re exceptional, and make sure to sell any stock that falls more than 7% below your purchase price. Remember, you don’t have to wait for the 7%-8% loss if the stock is clearly not acting well.
Focus on stocks that show strong relative strength during the current weakness. They could be some of the market’s leaders if the indexes are able to continue their rebounds.
Bitcoin surged 10% Wednesday morning, moving back above $52,000. The price of Bitcoin traded around $52,100 in morning trade, according to CoinDesk.
The Grayscale Bitcoin Trust (GBTC) ETF dropped nearly 4% on Tuesday, giving back a large portion of Monday’s 6.1% jump. Still, the Bitcoin-tracking ETF remains above its key 50-day line.
Bitcoin Stocks: PayPal, Square
IBD Leaderboard stock PayPal is rebounding from its 10-week support level, placing the Bitcoin play in a new buy area.
Shares of PayPal slipped 1.6% Tuesday, ending a two-day win streak. According to IBD Leaderboard commentary, “PayPal has reached its profit targets, but the stock is now in a new buy area. The stock is rebounding from its 10-week line, which offers a follow-on buy area.”
PayPal stock slipped 0.8% premarket Wednesday.
The price of Bitcoin, which PayPal is using, hit an all-time high on Feb. 21, topping out at $58,332.
Square extended a win streak to three sessions Tuesday amid a 4.65% advance after the company said that its industrial bank has started operations. The bank, called Square Financial Services, will underwrite and originate loans taken out by Square sellers through the company’s Square Capital program.
Square stock added 0.2% premarket Wednesday. Shares recaptured their 50-day line on Monday and added to those gains on Tuesday.
Rebounds from the 10-week line are best used as add-on opportunities. Be sure to purchase fewer shares when adding to an existing position to avoid drastically raising your average cost.
Dow Jones Stocks: Visa
Inside the Dow Jones Industrial Average, Visa stock is in buy range past a 211.69 buy point in a cup with handle, according to IBD MarketSmith chart analysis.
Shares fell 0.4% Tuesday, and are squarely in buy range. The 5% buy zone goes up to 222.27.
Stock Market Earnings: Fubo, Veeva
FuboTV, a sports-first live TV streaming service, added more-than-expected subscribers for the fourth quarter, but posted a much larger-than-expected loss. FUBO stock tumbled about 5% premarket Wednesday.
Shares closed Tuesday more than 30% off their 52-week high, having just regained their 50-day line.
Veeva Systems crushed fourth-quarter estimates Tuesday and delivered Street-topping guidance for the full year. The medical-software company earned 78 cents per share on $396.8 million in sales. The stock rallied more than 1% in premarket trade Wednesday.
Shares recently triggered the 7%-8% loss-cutting sell signal from a 314.09 buy point in a cup base.
Tesla stock skidded nearly 4.5% Tuesday, surrendering a large amount of Monday’s 6.4% gain. Shares could be forming a new base, but it’s too early to identify a new entry. Early Wednesday, Tesla fell 0.5% ahead of the market open.
Last week, the electric-auto leader broke down through its key 10-week moving average line, a critical support level.
On Jan. 25, Tesla stock hit a record high at 900.40, after climbing as much as 93% from a 466 buy point in a cup with handle. Shares are about 24% off that all-time high.
Dow Jones Leaders: Apple, Microsoft
Among the top Dow Jones stocks, Apple shares lost 0.3% Wednesday morning following Tuesday’s 2.1% fall. Apple stock remains below its 10-week line, but a strong rebound back above the level would be bullish for the stock’s prospects.
On Feb. 18, Apple stock triggered the 7%-8% loss-cutting sell rule when it fell more than 7% below its 138.89 buy point in a cup with handle.
Meanwhile, IBD Leaderboard stock Microsoft fell 0.5% ahead of the market open Wednesday, as it continues to hold above its recent 232.96 buy point. The software giant is still in buy range.
According to Leaderboard commentary, “Microsoft is back above the buy point as it climbs from the 50-day moving average. The stock is above an earlier entry of 228.22 in a mild rebound.”
Be sure to follow Scott Lehtonen on Twitter at @IBD_SLehtonen for more on growth stocks and the Dow Jones Industrial Average.
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