Futures moved higher in premarket trading Monday, as defense names pulled back from early gains following Friday’s U.S. missile attack on Syria, and investors looked to earnings results from Bank of America (BAC), Netflix (NFLX) and others.
Futures for the S&P 500 also gained 0.6%. Nasdaq 100 futures strengthened 0.7% above fair value, with retailer Tractor Supply (TSCO) seizing an early lead after an upgrade from Goldman Sachs.
The market’s young rally met resistance Friday as the Dow, S&P 500 and the Nasdaq all deflected from their 50-day moving averages. The three indexes are now contained in the narrowing range between support at their 200-day, and resistance at their 50-day levels. The market’s status remains positive, but investors should stay wary — a significant move past either moving average could either reinforce or dismantle the uptrend.
China stocks were mixed in premarket trading after China’s stock markets lost ground Monday, and following a tough session on Friday.
Bank of America trimmed its early gain to 0.4% as investors waded through what were generally first-quarter results that were better than expected. The stock has been caught below its 10-week moving average for the past five weeks, within a seven-week consolidation.
Netflix, an IBD Leaderboard stock, is scheduled to report results after the market’s close.
The U.S. led airstrikes vs. Syria late Friday, in retaliation for the Syrian government’s alleged use of chemical weapons a week earlier. Russia condemned the action, but threatened no response and said none of its troops stationed in Syria were injured.
President Trump declared “Mission Accomplished” on Twitter on Saturday. On Sunday, Syria returned to bombing civilian locations with conventional weapons. Also on Sunday, the Trump administration announced it was preparing a new round of sanctions against Russia for supporting the Syria regime during the alleged chemical attack.
Netflix Leads FANGs, Northrop Nears Buy Point
On the Dow, defense contractor United Technologies (UTX) trimmed its early gain to 0.9%. Among other defense-related names, Boeing (BA) rose 0.8%, Raytheon (RTN) climbed 0.5% and Northrop Grumman (NOC) whittled its early advance to 0.3%. Northrop is below a 359.53 buy point in a second-stage flat base.
The four FANG stock tech leaders were all positive ahead of the open, but Netflix gained 1.3% to step out to an early lead. The streaming entertainment leader is sitting atop a five-day advance that left shares up nearly 8% last week. That reversed a four-week decline and provided investors a buying opportunity as the stock rebounded from support at its 10-week moving average. Shares are now extended following that rebound.
Ulta Beauty (ULTA) popped 2.3% after an upgrade to buy, from neutral, by Guggenheim. The stock is testing resistance at its 40-week moving average as it begins its third, straight weekly advance. It is building the right side of a three-month consolidation.
China Stocks Mixed, IBD 50 Active
China-based stocks pared back early gains in premarket action, following sharp losses on China’s markets on Monday. The Shanghai Composite tumbled 1.5% and Hong Kong’s Hang Seng Index closed 1.6% lower. The People’s Bank of China on Friday further tightened restrictions on brokerages lending to investors and bank-lending to developers. China also expects the release of first-quarter GDP data on Tuesday.
China Lodging Group (HTHT) dropped 2.5%. The hotel chain reported preliminary first-quarter results showing occupancy rates trailing year-ago levels by notable margins. The stock has been attempting to climb off its 200-day moving average, within a two-month consolidation.
China-based e-commerce services provider Baozun (BZUN) narrowed a 2% premarket gain to 0.2%. The IBD 50 stock is extended after pulling back to retest a 40.08 buy point following an early March breakout.
Arista jumped 1.1% in premarket trading, after diving more than 9% on strong trade on Friday. The loss stopped short of undercutting a February, leaving the cloud networking leader’s two-month basing effort so far intact.
Brazil-based PagSeguro climbed 1.6% ahead of the open. The January IPO pared losses to less than 1% Friday after finding support at its 50-day moving average. Shares ended down 14% from a March high, and 60% above their IPO price.
Retail Sales Jump, New York Manufacturing Slows
Retail sales increased 0.6% in March, the Commerce Department reported. That reversed February’s 0.1% decline and topped consensus forecasts for a 0.4% advance. Autos and gas were a bigger-than-expected share of that action, however. Minus those categories, sales rose 0.3% — equal to their advance in February and below the economists’ consensus target for a 0.5% gain.
Manufacturing in the New York region slowed sharply in April, sending the New York Fed’s April Empire State manufacturing index to 15.8. That was down from 22.5 in March, outpacing expectations for a smaller decline for the month, to 18.5.
The NAHB’s Housing Market Index is set for a 10 a.m. ET release.
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