Stock futures hovered in narrowly positive territory early Monday, as markets moved to wrap up a strong August performance with a monthly payrolls report due. Chip and software names showed early strength. Facebook and Chipotle Mexican Grill each rose near buy points. Dynavax led the IBD 50 list, while Catalent jumped on earnings. And Home Depot rebounded toward a buy point on the Dow Jones today.
Dow Jones futures and S&P 500 futures rose a fraction above fair value, as the market heads into the last couple of sessions of August. After a strong performance from last week, this week’s action could be more muted as investors await yet another crucial monthly payrolls report, due from the Labor Department on Friday.
Nasdaq 100 futures crept ahead 0.1% on the stock market today. Small caps narrowly outpaced the early action, with Russell 2000 futures gaining 0.2%. Chipmaker DSP Group (DSPG) snapped 17% higher to lead the Russell 2000. Computer peripherals maker Synaptics (SYNA) agreed to buy DSP in a cash deal at $22 per share. Synaptics gained 0.8%.
Chip stocks posted modest gains following the DSP/Synaptics news. Nvidia (NVDA), Lam Research (LRCX) and Advanced Micro Devices (AMD) all rose less than 1%. The VanEck Vectors Semiconductor ETF (SMH) showed a 0.4% premarket gain. Nvidia is an IBD Leaderboard stock.
China-based stocks were mixed early Monday after the country’s regulators rolled out a new set of rules limiting online game playing for children. Games provider NetEase (NTES) fell more than 7%. Search engine operator Baidu (BIDU) ran 0.9% higher, trading high on the Nasdaq 100. Electric vehicle maker Li Auto (LI) gained 1.6% after reporting second-quarter results.
Medical research services provider Catalent (CTLT) rallied 2% after reporting a strong fiscal fourth-quarter performance. The move suggested the stock would move into extended territory, after clearing a 124.15 buy point in a cup-with-handle base a week ago.
Dow Jones Today: Amgen, Home Depot, Microsoft
Home Depot (HD) climbed 0.6% to lead the Dow Jones today. Home Depot stock has been struggling to maintain support at its 10-week moving average, after a brief breakout above a cup-with-handle base buy point at 335.55. The stock has pulled back no more than 6% below that mark, stopping short of the trigger for the automatic sell rule.
IBD 50, Leaderboard: Dynavax, Square
Dynavax Technologies (DVAX) headed the IBD 50 list, up more than 6% as investors continued to react to the company’s rollout, a week ago of its Covid-19 vaccine. More than 600,000 doses of the vaccine, developed jointly with Medigen Vaccine Biologics, were expected to be administered last week. Dynavax shares rose more than 40% for the week.
Also on the IBD 50 list, software initial public offerings Monday (MNDY) and Doximity (DOCS) were both up more than 1% in early trade. Leaderboard stock Square (SQ) gained 1.1%, after ending Friday in a buy range above an alternate handle entry at 267.87. Square’s buy zone runs to 281.26.
Overseas Markets Positive, As China Tech Clamp Down Continues
Oil futures were down slightly, although gasoline prices climbed as markets responded to offshore shutdowns caused by Hurricane Ida in the Gulf of Mexico. Bond yields dipped, with the 10-year yield at 1.30% vs. a 1.31% settle on Friday.
China’s markets opened the week on a positive note, carrying over last week’s rebound rally. The Shanghai Composite gained 0.2%. Hong Kong’s Hang Seng rallied 0.5%. The Shanghai benchmark heads for the final session of August riding a 3.9% gain so far for the month. The Hang Seng is down 1.6%.
China’s National Press and Publication Administration imposed new rules limiting online game playing for persons under 18 to one hour a day, three days a week, from Friday through Sunday. NetEase dived more than 7% on the news. Among China-based ETFs, the iShares MSCI China ETF (MCHI) dipped 0.3% in premarket trade. The Xtrackers Harvest CSI 300 China A-Shares ETF (ASHR) was down 1%. The KraneShares CSI China Internet ETF (KWEB) dropped 0.4%.
Europe’s markets defended narrow gains in afternoon trade. Frankfurt’s DAX traded fraction higher, while London’s FTSE 100 rose 0.3%. The CAC-40 in Paris climbed 0.15%. The SPDR Portfolio Europe ETF (SPEU) was inactive, after bouncing 1.6% last week following a test of support at its 10-week moving average. The fund is trading 1% below a 44.06 entry in what IBD MarketSmith analysis marks as an 11-week flat base.
Stocks To Watch: Chipotle, Facebook
Chipotle Mexican Grill (CMG) is sitting on a powerful six-week advance, closing Friday just above a 1,912.85 buy point. The buy point is in a four-weeks tight-pattern, a more bullish variation of a three-weeks tight. The buy range extends to 2,008.49.
Facebook (FB) is queued up in a five-week flat base with an entry at 377.65. The base is a third-stage base, not yet late stage. This suggests that, if a breakout occurs, Facebook stock could still have some room to run. The stock was featured as an IBD Sector Leader on Friday.
Nasdaq, S&P 500, Dow Jones Today
The Dow Jones today is climbing toward the sixth session since its rebound from a test of support at its 50-day moving average. The index gained 1.5% for the month through Friday, and is riding nicely above its 21-day moving average. That marks a strong August, a month in which the Dow has averaged a 0.68% decline over the past decade. The Dow has now gained in six of eight months since the start of the year, and is sitting on a year-to-date 15.8% climb through Friday.
For more detailed analysis of the current stock market and its status, study the Big Picture.
The S&P 500 has gained in six of the past seven sessions. It notched a 1.5% gain last week after its pullback stopped just shy of a test of 50-day/10-week support. The benchmark is for now in strong standing, holding comfortably at a new high, above its 21-day line and sitting atop a seven-month rally. It is up 2.6% in August, vs. an average loss of 0.5% over the past 10 years. The index is up 20% since Dec. 31.
The Nasdaq Composite has charged ahead in August, racking up a 3.1% advance for the month through Friday. That’s not unusual, as the Nasdaq has averaged a 0.4% gain for the month over the past 10 years, vs. the average declines for the Dow and the S&P 500. However, on an annual basis, the Nasdaq’s 17.4% gain still lags the S&P 500. But it turned in a market-leading 2.8% advance last week, jumping also to a new high and flashing sudden strength as the market heads into September.
Growth stocks have also run strong in August. The iShares Russell 1000 Growth ETF (IWF) has a 2.9% gain for the month through Friday. The fund’s 2.1% jump last week scored a breakout past a three-weeks-tight buy point at 284.44. There is also an alternate entry at 284.52. In either case, the ETF remains in a buy range ahead of Monday’s open.
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