Stock futures traded lower Monday, as markets reacted to mixed comments on Sunday from Fed Chief Jerome Powell. However, a number of stocks cut through the modest declines to stake out early gains. IBD Leaderboard stocks Floor & Decor and Ingersoll Rand both rallied in early trade. Dow Jones stocks JPMorgan and Goldman Sachs were near buy points as they prepared to kick off the Q1 earnings season later this week.
Dow Jones futures and S&P 500 futures moved 1.5% below fair value. Nasdaq 100 futures were off around 0.3% on the stock market today. Small caps clung to narrow gains, with Russell 2000 futures up about 2%.
Federal Reserve Chairman Jerome Powell said in a CBS “60 Minutes” interview aired Sunday that the “economy is about to start growing much more quickly,” while noting that, in the stock market, “some asset prices are overvalued.”
Tesla (TSLA) was an early standout, rising 1.5% to lead the Nasdaq 100. Canaccord upgraded Tesla stock to buy, from hold, with a price target at 1,071. The report said Tesla had the potential to dominate the $1 trillion energy generation and storage market.
Leaderboard: Floor & Decor, Ingersoll Rand Rally
IBD Leaderboard stocks Floor & Decor (FND) and Ingersoll Rand (IR) rallied in early trade. Floor & Decor rallied nearly 6% in premarket trade. The stock is in a buy range that runs to 113.55, after a powerful breakout from a cup base on Friday.
Ingersoll, a Leaderboard watchlist stock, surged 3.8% after announcing adeal to sell its Club Car unit for $1.68 billion. The move implied an early breakout past a 51.71 buy point in a four-weeks tight pattern.
Trex, Alibaba Group Climb
On the Russell 2000, Trex (TREX) gained nearly 2% following an upgrade to buy, from hold, by Truist. The maker of synthetic decking products carries a 90 Composite Rating from IBD, and is climbing the right side of an 8-week cup with a buy point at 107.74.
An early surge by China’s e-commerce giant Alibaba Group Holding (BABA) failed to rally other China-based stocks. Alibaba soared nearly 6% as a record-setting $2.5 billion anti-competition fine levied by Chinese regulators was less than many had anticipated. Alibaba shares remain deep in a six-month consolidation.
Stocks To Watch
Shares of 10x Genomics (TXG) traded narrowly higher Monday, a 201.80 buy point but could form a handle. Square (SQ) flashed buy signals after clearing a short-term high of 252.60 and is rising toward a buy point of 283.29. Etsy (ETSY) also retook its 50-day line, below a potential early entry of 231.44, as well as an official buy point of 251.96. Pinterest (PINS) is nearing a 90 buy point.
Steelmakers Nucor (NUE) and Steel Dynamics (STLD) are both below buy points in three-weeks tight patterns. Nucor’s buy point is at 82.86. Steel Dynamics is at 52.69. The steel industry, fueled by recovery optimism and speculation on the success of the White House’s infrastructure plan, has been one of the fastest rising industries in 2021.
Nasdaq ETFs Approach Buy Points
Last week’s strong move by the Nasdaq showed a change in complexion of the market’s uptrend, with tech leaders and growth stocks stepping more confidently back onto the stage. A 3.1% gain for the week left the Nasdaq Composite 2% below its record high, notched on Feb. 16.
It also left Nasdaq tracking ETF Invesco QQQ Trust (QQQ) less than 1% below a cup-based buy point at 338.29. The more aggressive, leveraged Nasdaq tracker ProShares UltraPro QQQ (TQQQ) finished the week 4% below 111.96 cup-base entry.
Dow Industrials, S&P 500 Extended
The S&P 500 and the Dow Jones today start the week further than usual above their 50-day moving averages. For the time being, this is a moderate technical caution flag hanging over the market. Both indexes have easily outstripped the Nasdaq since the beginning of the year, the Dow up 10.4% and the S&P 500 with a 9.9% gain, vs. a 7.1% gain for the Nasdaq.
For more detailed analysis of the current stock market and its status, study the Big Picture.
The Nasdaq is accustomed to being the pacesetter for the market. A pause or pullback in the Dow and S&P 500 could allow the tech-heavy Nasdaq to reassert its leadership role.
Friday’s stock market wrap video (available at the top of this article) noted that the market’s current confirmed uptrend is rewarding cautious optimism and balanced portfolios. Investors should be taking advantage of this market rally, adding to exposure in recent weeks while avoiding being overweight in any one particular stock or sector.
Dow Jones Q1: JPMorgan, Goldman, UnitedHealth
Dow Jones stocks JPMorgan (JPM) and Goldman Sachs (GS) kick off the first-quarter reporting season early Wednesday, along with Wells Fargo (WFC), Infosys (INFY) and Lovesac Co. (LOVE). Dow Jones peer UnitedHealth Group (UNH) reports on Thursday. Now is the perfect time for investors to brush up on their earnings season options buying strategy, in order to limit risk when buying stocks of companies reporting earnings.
Goldman Sachs is in a buy range on a rebound from its 10-week moving average.
JPMorgan is below a 162.79 buy point in a four-weeks tight pattern. Wells Fargo is also in a four-weeks tight, with a buy point at 41.64.
Infosys is in a buy range that runs through 20.13, after clearing a 19.17 buy point in a cup base.
Find Alan R. Elliott on Twitter @IBD_Aelliott
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