Dow Jones futures fell sharply Sunday night, along with S&P 500 futures and Nasdaq futures, amid weak China trade. With the 2019 stock market rally rolling on to a key level, more top stocks have formed bases with proper buy points. Cisco stock, Workday stock, McDonald’s stock, Xilinx stock and Bilibili stock have sound bases as of Friday’s close.
Workday (WDAY), McDonald’s (MCD), Xilinx (XLNX) are all within 5% of buy points. Bilibili (BILI) is about 8% off its high. Cisco Systems (CSCO), a Dow Jones component like McDonald’s stock, has more work to do. Workday stock and Xilinx stock are both IBD Leaderboard watch list stocks, with Xilinx also on the IBD 50 list.
Dow Jones Futures Today
Dow Jones futures retreated 0.9% vs. fair value. S&P 500 futures lost 0.9%. Nasdaq 100 futures tumbled 1%. Chinese exports were weaker than expected in December, heightening fears about the world’s second-largest economy amid the U.S.-China trade war. Chinese exports fell 4.4% in dollar terms, with imports off 7.6%.
Remember that Dow futures and other overnight action don’t necessarily translate in actual trading in the next regular session.
Citigroup kicks off bank earnings on Monday, followed by JPMorgan Chase (JPM) and Wells Fargo (WFC) on Tuesday. Citigroup (C) earnings are expected to rise 23% to $1.57 a share, with revenue up 2% to $17.65 billion. Earnings season overall picks up, with Netflix (NFLX), Delta Air Lines (DAL) and American Express (AXP) among the other notable reports this week.
2019 Stock Market Rally
The 2019 stock market rally showed more strength last week. A Thursday intraday pullback ended with modest gains while Friday’s intraday retreat ended with fractional losses, just shaving big weekly gains. The Nasdaq composite is just below its 50-day moving average, with the Dow Jones and S&P 500 index not far behind. The 50-day line could act as resistance as bears try to stop bulls’ advance.
A modest pullback over a few days would let the market take a break and allow more stocks to finish up bases or handles. The risk, of course, is that a pullback would put at risk the 2019 stock market rally.
Top Stocks Set Up With Buy Points
With the stock market rally rising, top stocks that sold off in the correction, especially in December’s furious selling, have had a chance to bounce back and consolidate near buy points. Cisco stock, Workday stock, McDonald’s stock, Xilinx stock and Bilibili just finished proper bases on Friday.
Cisco stock tried to break out of a cup-with-handle base on Dec. 3, closing above the 48.54 entry. But that day turned out to be a short-term stock market peak. Cisco stock reversed lower, bottoming on Dec. 24 along with the broader market.
Cisco stock now has a consolidation with a 49.24 buy point. But shares haven’t rebounded much in recent weeks. Cisco stock is 11.5% below that entry and is still below its 50-day and 200-day moving averages. In fact, the relative strength line, which tracks a stock’s performance vs. the S&P 500 index, has trended slightly lower since Christmas.
Workday stock blasted out of a base on Nov. 29 following strong earnings. But with a short-lived stock market rally rolling over after Dec. 3, Workday shares fell back, ultimately invalidating the 157.22 buy point.
One could have argued that it was a stock market correction and note that Workday found support at its 50-day line and that its RS line held at highs the entire time.
In any case, Workday stock has rebounded and has a sound cup base with a 172.77 buy point. Shares closed Friday at 167.46.
McDonald stock cleared a saucer-with-handle buy point of 172.10 on Oct. 23, and kept running to 190.88 on Nov. 29. Shares pulled back all the way to 169.04, wiping out a double-digit advance. McDonald’s stock has bounced back, reclaiming its 50-day line last week. It now has a flat base in a base-on-base pattern, with a 190.98 buy point.
Xilinx stock is one of only a few chipmakers setting up in bullish bases, though chip stocks have been leaders in the 2019 stock market rally. Shares hit an 18-year high on Dec. 3, but then sold off with the stock market correction, undercutting its 50-day line. Xilinx stock rebounded after Christmas, soon reclaiming its 50-day line. As of Friday, it has a cup base with a 95.28 entry.
The RS line stayed at highs during the sell-off and in the post-Christmas recovery.
Bilibili stock was one of a trio of red-hot Chinese consumer internet IPOs from the first half of 2018. But while iQiyi (IQ) and Huya (Huya) are just starting to bounce back, Bilibili has been a standout — especially among Chinese internets. Bilibili stock staged a brief, messy breakout from a consolidation in late November, but fell back somewhat in December. Shares really didn’t fall much and have bounced back since early January.
Bilibili stock now has a cup-base buy point of 16.84. Shares closed Friday at 15.36.
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