Stock market futures fell modestly late Tuesday after the S&P 500 index, Dow Jones industrial average and Nasdaq composite rallied strongly during the regular session. Two of the world’s most powerful men, China President Xi Jinping and Facebook (FB) CEO Mark Zuckerberg, didn’t offer big surprises, but investors cheered their comments.
With the market outlook improving, investors should look for growth stocks setting up in sound bases. Netflix (NFLX), Adobe Systems (ADBE), Salesforce.com (CRM), Workday (WDAY) and ServiceNow (NOW) share similar bullish traits.
Stock Market Futures
S&P 500 futures sank 0.3% vs. fair value. Dow Jones futures fell 0.3%. Nasdaq 100 futures were off 0.2%. Keep in mind that stock market futures trading overnight often doesn’t translate into regular-session action.
Xi, Zuckerberg Spur Rally
During Tuesday’s session, the Nasdaq leapt 2.1%, the Dow Jones 1.8% and the S&P 500 1.7%. Xi Jinping promised economic reforms, including lower auto tariffs. But the pledges were largely recycled from speeches last year.
Facebook’s 4.5% pop helped lift the Nasdaq. Zuckerberg didn’t run into major problems during a Senate hearing over Facebook’s data privacy scandal. He does face a House panel Wednesday morning. Facebook’s stock is still well below its 200-day moving average.
Growth Stocks Acting Well
Netflix, Adobe Systems, Salesforce, Workday and ServiceNow all have Composite Ratings above 95, with Netflix, Adobe and ServiceNow boasting a best-possible 99. The Composite Rating combines several proprietary ratings on earnings and other key criteria into one score. All-time stock winners often have a Composite Rating of at least 95 near the start of their runs.
All but Adobe Systems have been finding support at their 50-day moving averages. That’s a potential buying opportunity, though it would be good to see strong gains in heavier volume. Netflix, Salesforce, Workday and ServiceNow are all working on potential flat bases that could be viable after this week.
Netflix is an IBD Leaderboard stock. But the internet TV giant reports first-quarter earnings late Monday. Buying or holding a stock heading into earnings can be risky. Investors may want to consider an earnings options strategy that lets you cash in on post-earnings stock gains, while minimizing the risk from a weak quarter.
Adobe never pulled back to its 50-day line. The stock is consolidating for the past few weeks near its highs. It does not yet have a potential buy point in sight.
Adobe, Salesforce, Workday and ServiceNow are all business software makers, which have been hot in recent months.
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