Dow Jones futures fell slightly early Tuesday, along with S&P 500 futures and Nasdaq futures, after the current stock market rally roared back from five straight losses. Growth stocks led Monday, with Palo Alto Networks stock, Synopsys stock, Adobe stock and SS&C stock all reclaiming buy points. Meanwhile, fellow software name Coupa Software (COUP) topped earnings views late, but Coupa stock was little changed.
These stocks are all highly rated. Palo Alto Networks (PANW) has a best-possible IBD Composite Rating of 99. So does SS&C Technologies (SSNC). Adobe (ADBE) has a 98 Composite Rating and Synopsys (SNPS) a 91. Coupa stock has a 94 Composite Rating.
Dow Jones Futures Today
Dow Jones futures fell 0.2% vs. fair value, though that was in large part due to Boeing (BA) stock falling more than 2% after losing 5.3% on Monday. S&P 500 futures were just below break-even. Nasdaq 100 futures edged lower.
The U.K. Parliament votes today on Prime Minister Theresa May’s latest Brexit deal. Sterling fell to session lows after the U.K.’s attorney general said the tweaked deal still offers no internationally lawful means of exiting the backstop unilaterally. A no vote could raise the prospect of a no-deal Brexit, or no Brexit at all.
Keep in mind that overnight action in Dow futures and elsewhere doesn’t necessarily translate into actual trading in the next regular stock market session. Dow Jones futures indicated a modest loss ahead of Monday’s open, while other stock futures pointed modestly higher.
Current Stock Market Rally
Monday’s stock market action validated the idea that last week’s retreat was a normal market pullback after a 10-week advance. On Monday, the Nasdaq composite rose 2% and the S&P 500 index advanced 1.5%, both reclaiming their 200-day moving averages. The Dow Jones rallied 0.7% even with Boeing (BA) falling 5%, though that was well off its 13.5% intraday loss.
Even better, growth stocks were big winners, with software stocks among the champions. Software is rated No. 1 out of 33 sectors tracked by IBD, rising 22.4% so far this year alone.
Among best ETFs, the iShares Expanded Tech-Software Sector ETF (IGV) on Monday rallied 1.9% to 205.55, reclaiming its 10-day and 21-day moving averages. The IGV ETF is less than 1% from reclaiming a 206.76 cup-base entry. It was added to IBD’s SwingTrader on Monday.
Coupa earnings came in at 5 cents a share, up 150% and beating break-even views. Revenue grew 39% to $74.9 million, also topping. But Coupa earnings per share had cleared estimates by 10 to 17 cents in each of the prior four quarters. Also, Coupa earnings guidance for Q1 and the current fiscal year were weaker than expected.
Coupa stock rose a fraction early Tuesday after climbing 3.3% to 93.57 on Monday. On Friday, Coupa stock plunged to 83 right after the open, round-tripping a 20% gain from an 84.63 cup-base buy point. But like many top stocks rebounding from their 10-week lines, Coupa stock rallied almost immediately and closed Friday down just 0.55% at 90.59.
With Coupa stock trading in a range of 83 to 99.64 over the past six sessions, investors should be ready for big moves Tuesday.
Palo Alto Stock
Palo Alto stock rose 2.7% to 240.88 on Monday, moving back above a 239.60 cup-base entry. according to Marketsmith. The cybersecurity leader broke out on Feb. 27 following earnings, hitting a record 260.63 intraday. Shares soon faded, falling below the buy point last Tuesday, but then held firm the rest of the week.
Adobe stock rose 2.4% to 260.96, just retaking a 260.82 double-bottom entry. It’s still below an alternate handle buy point of 263.46.
Adobe earnings are due Thursday night. Investors should be cautious about buying or holding a new position in a stock right before earnings.
The chip-design software maker rose 2.1% to 105.14. Synopsys stock moved back above its 103.50 buy point.
The financial software stock rose 3% to 62.33. SS&C stock easily moved back above a 61.07 entry. On Friday, SS&C Technologies plunged as low as 54.03 at the open. But almost instantly it bounced back. SS&C stock finished down just 0.7% at 60.53.
Expect Slower Stock Market Rally
Except for those who just started investing on Dec. 26, everyone knows that every stock market rally will have pauses and pullbacks along the way. The key is how the major indexes and leading stocks respond. Monday’s action was promising for the current stock market rally. But it was just one day.
Also, investors should not expect the current stock market rally to run up at such a fast and steady pace as it did in the 10-week rebound from the low. Stock markets tend to fall on an elevator and rise on an escalator.
YOU ALSO MIGHT LIKE: