Dow Jones futures tilted higher late Monday, along with S&P 500 futures and Nasdaq futures. The stock market rally got a much-needed win, with Apple (AAPL) and Adobe stock rebounding bullishly and Tesla (TSLA) moving back above a key level.
Additionally, Lennar (LEN) reported a surprise earnings gain late Monday as homebuilders and the broader housing sector have been holding up well. Lennar stock fell solidly overnight after closing near a record high.
Meanwhile, would-be Tesla rival Nikola (NKLA) fell sharply late on a report that the SEC will examine recent short-seller claims. Nikola stock had jumped 11% on Monday as the electric-truck startup somewhat rebutted Hindenburg Research claims of “intricate fraud.”
Stock Market Rally Rebounds
After a rough two weeks, the stock market rally had a positive session Monday, helped by merger activity and coronavirus vaccine news. The Nasdaq is back above its 50-day moving average, with Tesla and merger-fueled Nvidia (NVDA) among the big drivers. But investors should look to see if the Nasdaq can get back above its 21-day moving average and even last week’s peak before feeling more confident. If you make purchases, make them small.
Apple stock rebounded from its 10-week line. That’s actionable, though the market conditions are a concern. Meanwhile, Adobe (ADBE) also bounced from its 10-week line, but with Adobe earnings due Tuesday night, a new position would be highly risky except with an options strategy. Tesla stock spiked back above its 21-day exponential moving average and the 400 level. But it’s a very volatile chart with a slew of news for Tesla and rivals in the next few weeks.
Nevertheless, cast a wide net for possible buys. Several new breakouts came today outside the tech sector.
Housing Stocks Building Foundation
Also, the housing sector is acting well. In addition to Lennar, LGI Homes (LGIH) and other homebuilders, mortgage plays such as PennyMac Financial (PFSI) and home furnishings plays such as Tempur Sealy (TPX) perked up. Both of those last two stocks broke out Monday.
Many medicals are looking interesting. Gilead Sciences (GILD) is paying a 108% premium for Immunomedics (IMMU) in a $21 billion deal, boosting cancer and biotech plays. Guardant Health (GH) broke out to a 52-week high for the cancer test specialist. Rare-disease biotech Horizon Therapeutics (HZNP) jumped 8.6% to a record close, near various buy points.
Dow Jones Futures Today
Dow Jones futures rose 0.1% vs. fair value. S&P 500 futures advanced 0.1%. Nasdaq 100 futures climbed 0.2%. Remember that overnight action in Dow futures, NKLA stock and elsewhere doesn’t necessarily translate into actual trading in the next regular stock market session.
Coronavirus cases worldwide reached 29.41 million. Covid-19 deaths topped 931,000.
Coronavirus cases in the U.S. have hit 6.74 million, with deaths above 198,000.
On Saturday, AstraZeneca (AZN) said U.K. late-stage trials of its coronavirus vaccine had restarted after being halted due to a participant becoming violently ill. But U.S. late-stage trials are still paused.
Dow Jones giant Pfizer (PFE) and BioNTech (BNTX) are expanding their late-stage trial to 44,000 patients to test on broader populations. Pfizer says its vaccine could be available by year-end if tests go well.
Stock Market Rally Monday
U.S. Stock Market Today Overview
Last Update: 4:22 PM ET 9/14/2020
The coronavirus stock market rally had a solid response to last week’s sell-off. The Dow Jones Industrial Average advanced 1.2% in Monday’s stock market trading. The S&P 500 index climbed 1.3%. The Nasdaq composite rose 1.9%, off intraday highs but back above the 50-day moving average.
Apple stock popped 2% after finding support at its 10-week line on Friday. Adobe climbed 3.1% ahead of earnings Tuesday night, continuing to rebound from its 10-week line and above a 470.71 buy point.
Tesla stock jumped nearly 13% to 419.62, back over key levels as EV stocks charged higher. But shares are in the middle of a nine-session range of 329.88 to 502.49. TSLA continued to rise in active trade overnight.
Nvidia stock rose 5.8% as the chipmaker reached a $40 billion deal with SoftBank to buy U.K. chip designer Arm Holdings.
Among the best ETFs, the Innovator IBD 50 ETF (FFTY) climbed 2.1%. The iShares Expanded Tech-Software Sector ETF (IGV) rose 1.85%, helped by Adobe stock. The VanEck Vectors Semiconductor ETF (SMH) popped 2.25%, with Nvidia among the big winners.
PennyMac Financial rose 7.2% to 57.68, clearing a 56.09 buy point from a short consolidation.
Tempur Sealy stock jumped 8.4% to 92.92 after the mattress retailer guided high on Q3 sales. TPX cleared an 89.33 four-weeks-tight entry that also serves as a handle on a consolidation going back to Feb. 13.
Guardant Health stock rose 7.8% to 103.15, clearing a 98.98 cup-with-handle buy point.
Angico Eagle Mines, the IBD Stock Of The Day, jumped 5.2% to 86.47, above an 84.76 flat-base buy point. Gold stocks are in favor right now. The Federal Reserve meeting announcement on Wednesday afternoon could be a catalyst for big gains or losses for gold and silver plays.
DraftKings stock vaulted 17% to 48.62, blasting out to a new high with 44.89 serving as a buy point. DraftKings will be ESPN’s exclusive daily fantasy sports and co-exclusive sportsbook partner. With the NFL season underway, NBA playoffs in full force, baseball playoffs looming and many other sports leagues in action, online sports betting is in focus.
Lennar earnings rose 33% to $2.12 a share. Revenue edged up to $5.87 billion. Analysts expected Lennar earnings per share to fall 5% to $1.51, with revenue down 9% to $5.33 billion.
The homebuilder’s stock fell nearly 5% in late trade. Shares rose 2% to 79 on Monday, just below its recent all-time high of 80.
The Lennar earnings conference call is on Tuesday morning.
Stock Market Rally Gets Reprieve
What a difference a day makes. With the stock market rally on the edge of turning into a correction, the major indexes rebounded Monday. Some top stocks fared well, with many new breakouts and bullish rebounds.
But don’t get too excited. It’s just one day. The stock market is still in an “uptrend under pressure.” One bad day would push the market rally to the brink or beyond. The Nasdaq reclaimed its 50-day line, but is only 0.9% above that key level. Meanwhile, it’s 1.4% below the 21-day line. The S&P 500 index, which found support at its 50-day on Friday, looks better, but it hit resistance at its 21-day.
If the stock market rally finds its footing and has legs, there will be opportunities to jump on board. If the market rally falters or moves sideways for an extended period, being all or mostly in cash will be the right call.
This is still a time to be relatively cautious. This is no longer the April-August booming stock market rally. Keep new buys modest. Build your watchlist, focusing on stocks with strong relative strength lines.
Read The Big Picture every day to stay in sync with the market direction and leading stocks and sectors.
Please follow Ed Carson on Twitter at @IBD_ECarson for stock market updates and more.
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