Dow Jones futures were little changed late Monday, along with S&P 500 futures and Nasdaq futures, after a wild stretch. DJIA futures dived after White House trade official Peter Navarro said the China trade deal is "over." But DJIA futures erased losses in whipsaw action as Navarro said he wasn't saying that the U.S. would break off the phase-one trade accord. President Donald Trump said the China deal is "fully intact."
XNavarro told Fox News that the China trade deal was "over," saying the "turning point" was the U.S. learning about the spreading coronavirus only after the phase one accord was signed on Jan. 15. That sent Dow Jones futures tumbling. But then Navarro told the media that his comment was not about the phase-one China trade deal, which remains in place. He said his comments were taken "wildly out of context."
President Donald Trump tweeted Monday night, "The China Trade Deal is fully intact. Hopefully they will continue to live up to the terms of the Agreement!"
Apple, Microsoft and other big-cap techs led Monday's strong session for the coronavirus stock market rally. Netflix (NFLX) broke out while Fortinet (FTNT), Splunk (SPLK), Inphi (IPHI) and Atlassian (TEAM) also flashed buy signals.
The stock market rally had powered higher despite soaring new coronavirus cases in the U.S. and worldwide. Apple and AAPL stock were in focus Monday, as the Dow Jones tech giant kicked off its World Wide Developers event. As expected, Apple said it will move toward using in-house chips for its Mac computers, replacing Intel (INTC) processors.
Apple stock, Microsoft stock, Fortinet stock, Netflix stock and Atlassian stock are all on IBD Leaderboard. NFLX stock and Inphi stock are on SwingTrader. FTNT stock and Netflix are on the IBD 50 list.
Microsoft and Fortinet stock are IBD Long-Term Leaders. TEAM stock is on the Long-Term Leaders Watchlist.
Dow Jones Futures Today Volatile With China Trade Deal Comments
Dow Jones futures rose 0.2% vs. fair value. DJIA futures initially tumbled on Navarro's initial comments, erased losses on his revised statement and moved higher on Trump's tweet. S&P 500 futures were up 0.15% and Nasdaq 100 futures fell a fraction. Before the China trade comments, Dow futures were modestly higher. DJIA futures have become more volatile in recent days.
Remember that overnight action in Dow futures and elsewhere doesn't necessarily translate into actual trading in the next regular stock market session. On Sunday afternoon, Dow Jones futures opened down nearly 2% vs. fair value, but rebounded to little changed by the open — and that didn't foreshadow the gains for the Dow and especially the Nasdaq.
Coronavirus News
Coronavirus cases worldwide have raced above 9.18 million. Covid-19 deaths are above 473,000. Coronavirus cases in the U.S. have reached 2.38 million, with deaths at 122,000.
Monday's new Covid-19 cases have topped 31,000, making its second-highest Monday ever.
New coronavirus cases are hitting record highs in California, Florida, Texas and several other states. "To state the obvious, COVID-19 is now spreading at an unacceptable rate in Texas," says Texas Gov. Greg Abbott, who encouraged Texans to wear masks.
On the plus side, so far Covid-19 deaths have continued to trend lower. The average age of people contracting the coronavirus appears to be much lower than a few months ago, reducing the risk of hospitalizations and deaths. Hospitals may have figured out better practices for deal with serious cases. And there may be lag between the recent upsurge in coronavirus infections and death tolls.
Coronavirus Stock Market Rally
The coronavirus stock market rally started off with modest losses, but the Nasdaq led the way higher.
The Dow Jones Industrial Average rose 0.6% in Monday's stock market trading. The S&P 500 index climbed 0.65% and the Nasdaq composite 1.1%. The Dow Jones today is still below its 200-day moving average, along with the Russell 2000. The S&P 500 is consolidating in its recent range. The Nasdaq also is in its recent range, but rose for a seventh straight session and closed above 10,000.
Apple stock rose 2.6% and Microsoft stock 2.8%, both hitting record highs. AAPL stock and MSFT stock both have market capitalizations above $1.5 trillion and are members of the DJIA, S&P 500 index and Nasdaq, so when they move they move markets. These tech titans aren't lumbering either: The relative strength lines for Apple stock and Microsoft stock are at all-time highs, reflecting their outperformance vs. the broader stock market rally.
Growth stocks overall had a strong session, especially software.
Among the best ETFs, the Innovator IBD 50 ETF (FFTY) rallied 1.55%. The iShares Expanded Tech-Software Sector ETF (IGV) jumped 2%. Microsoft stock is the top IGV holding. The ETF also includes Fortinet stock and Splunk stock. The VanEck Vectors Semiconductor ETF (SMH) advanced 0.9%.
Netflix Stock
Netflix stock rose 3.2% to 468.04. That cleared a 459.07 flat-base buy point, according to a weekly MarketSmith chart. Last week, NFLX stock shot up 8.5% last week, staging a bullish rebound from its 10-week moving average.
With coronavirus cases picking up again, Covid-19 plays such as Netflix stock have gained ground over the last several sessions.
Fortinet Stock
Fortinet stock rallied 4.5% to 142.87, crossing a short downward-sloping trend line, offering an entry or add-on buy point for advanced traders. Last week, FTNT stock rallied 4.9%, rebounding from its 10-week moving average.
Fortinet stock is working on a new base. Its consolidation is just over 15%, so it technically doesn't qualify as a flat base, which can be as short as five weeks. At the end of this week, FTNT stock will have a proper base with a 149.79 buy point. Investors also could view the pattern as a short double-bottom base with a 146.73 entry.
Fortinet stock was Monday's IBD Stock Of The Day.
Atlassian Stock
Atlassian stock jumped 6.9% to 184.56 on Monday, rebounding bullishly from its 10-week line, making it a new buy. TEAM stock had found support at that key level for several weeks. Shares had traded tightly on a weekly basis recently, but the collaborative software maker tends to be volatile.
Atlassian stock is working on a new base, but that needs a few weeks to form.
Splunk Stock
Splunk stock gained 3.2% to 193.09, clearing a short consolidation above a prior base, providing an aggressive entry. That looks more obvious on a weekly chart, though a daily chart might have offered an earlier entry for SPLK stock near Monday's open or even last Friday.
Like Atlassian stock, Splunk stock is volatile.
Inphi Stock
Inphi stock rose 3.8% to 114.90, rallying off its 10-week line. This is an opportunity to start or add to position in the data-center chip leader after a big run. IPHI stock has been consolidating for a few weeks, but like Atlassian stock needs a few weeks before it has a proper base.
Stock Market Rally Will Do What It Wants
While the China trade deal apparently isn't "over," investors always need to be prepared.
While an abrupt sell-off would be damaging, a pullback or sideways action in the coronavirus market rally would be normal and healthy. It would let more stocks like Fortinet, Atlassian and Inphi to complete proper bases. But the stock market rally is going to do what it's going to do. Right now Apple stock and Microsoft stock are running higher while growth stocks are sprinting.
Remain engaged and be flexible. Read The Big Picture every day to stay in sync with the market trend and leading stocks and sectors.
Please follow Ed Carson on Twitter at @IBD_ECarson for stock market updates and more.
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