Dow Jones futures, S&P 500 index futures and Nasdaq 100 futures edged higher early Wednesday morning after the stock market suffered big losses during the regular session. The Nasdaq composite undercut Friday’s recent low as Nvidia (NVDA), Tesla (TSLA), Facebook (FB) and Twitter (TWTR) led the tech meltdown. The S&P 500 index and Dow Jones neared their 200-day moving averages again.
S&P 500 index futures rose 0.1% above fair value. Dow Jones futures were 0.1% higher than. fair value. Nasdaq 100 futures climbed 0.2%.
Keep in mind that overnight trading doesn’t always translate into how stocks will open and close the following day. Futures looked strong ahead of Tuesday’s regular session, but after a modest gain at the open the stock deteriorated.
After crashing to close down 8.2%, Tesla stock fell 2.7% late as Moody’s downgraded it on Model 3 production concerns. Nvidia, Facebook and Twitter dipped late. During Tuesday’s regular session, Nvidia fell 7.8%, Facebook 4.9% and Twitter 12%, all in more than double normal volume. Nvidia and Twitter tumbled through their 50-day moving averages.
Apparel-Shoes & Related Manufacturing, ranked No. 7 out of 197 industries that IBD tracks, edged up 0.1%. That was the only group in the top 50 that managed any gain in the broad stock market sell-off. Dow Jones component Nike (NKE) edged 0.4% higher. Nike’s relative strength line, which gauges a stock’s performance vs. the S&P 500 index, rose to an 18-month high.
Investors should be looking to raise cash by taking profits in winning stocks. Be quick to cut losses. This is not a time to be buying. The stock market is flashing numerous negative signals. In any case, few top stocks are even attempting breakouts.
Build Your Stock Watch List
This is a time to be building a watch list, regularly adding and pruning stocks of interest along the way. Don’t forget the pruning: These six big-cap tech stocks reclaimed their 50-day lines on Monday, including Nvidia, but sold off Tuesday.
When the stock market shows a convincing uptrend once again, the first stocks to break out are often the rally’s big winners. So you want to be ready.
Apparel, Retail Stocks Offer Some Strength
Nike closed just below its 50-day line on Tuesday, continuing to consolidate, but it has not quite formed a proper base. Meanwhile, yogawear retailer and maker Lululemon Athletica (LULU) and home furnishings chain RH (RH) shot up late on strong earnings.
Several other apparel and retail stocks are faring well. Five Below (FIVE) once again tried to clear a buy point Tuesday, but reversed. Urban Outfitters (URBN) fell just below a buy point. American Eagle Outfitters (AEO) and Burlington Stores (BURL) are still in range. Macy’s (M) and Canada Goose (GOOS) are consolidating bullishly.
Keep in mind that these are pockets of resilience. Many other retail stocks, including Walmart (WMT) and Target (TGT), are struggling. And retail may be seen as a quasi-defensive investor play right now. If the stock market rebounds, investors could lose their interest in apparel and retail names and jump back into techs.
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