Stock futures unwound some of the week’s gains early Friday, as earnings news and concerns about coronavirus clampdowns in Europe and China dragged on early trade. Advanced Micro Devices and Nio traded in buy ranges. Blank check outfit Climate Change Crisis spiked on news it would acquire charging station operator EVgo. And Intel and IBM dived deep to the bottom of the Dow Jones today, after reporting earnings late Thursday.


Dow Jones futures thinned early losses to 0.65{c34e2c9cd63a11c97fab811dbaaefe0cfbb1edd2527888e1a44d36f3491ee811}, with IBM (IBM) down more than 8{c34e2c9cd63a11c97fab811dbaaefe0cfbb1edd2527888e1a44d36f3491ee811}, Intel (INTC) off 4.9{c34e2c9cd63a11c97fab811dbaaefe0cfbb1edd2527888e1a44d36f3491ee811} and Exxon Mobil (XOM) lagging 2.8{c34e2c9cd63a11c97fab811dbaaefe0cfbb1edd2527888e1a44d36f3491ee811} as coronavirus concerns sent oil prices sharply lower. S&P 500 futures were off 0.6{c34e2c9cd63a11c97fab811dbaaefe0cfbb1edd2527888e1a44d36f3491ee811}. Nasdaq 100 futures traded pared declines to 0.6{c34e2c9cd63a11c97fab811dbaaefe0cfbb1edd2527888e1a44d36f3491ee811} below fair value on stock market today.

Small caps slightly outpaced the early declines, with Russell 2000 futures down 0.7{c34e2c9cd63a11c97fab811dbaaefe0cfbb1edd2527888e1a44d36f3491ee811}. Chip stocks came under clear early pressure, as Intel and Taiwan Semiconductor (TSM) led early losses on the Philadelphia Semiconductor Index. The iShares PHLX Semiconductor ETF (SOXX) dropped 1.1{c34e2c9cd63a11c97fab811dbaaefe0cfbb1edd2527888e1a44d36f3491ee811} in premarket trade.

Intel’s fourth-quarter revenue and earnings comfortably cleared analyst targets, and management guided first-quarter expectations well above analyst forecasts. The company reported just ahead of Thursday’s close, and shares vaulted 6.5{c34e2c9cd63a11c97fab811dbaaefe0cfbb1edd2527888e1a44d36f3491ee811} before Thursday’s closing bell. Intel stock is trading in a seven-month cup base with a buy point at 65.21, according to IBD MarketSmith analysis.

Taiwan Semiconductor, an IBD 50 and Leaderboard stock, dropped 3.3{c34e2c9cd63a11c97fab811dbaaefe0cfbb1edd2527888e1a44d36f3491ee811} early Thursday. The leading chip manufacturer is working on its 12th straight weekly advance, and has a 23{c34e2c9cd63a11c97fab811dbaaefe0cfbb1edd2527888e1a44d36f3491ee811} so far in January, through Thursday’s close. Shares are extended after clearing a three-weeks tight buy point at 107.94 at the end of December.

PPG Industries (PPG), CSX (CSX) and Intuitive Surgical (ISRG) were among the companies posting early losses on earnings news. Railroad Kansas City Southern (KSU) managed a 1.4{c34e2c9cd63a11c97fab811dbaaefe0cfbb1edd2527888e1a44d36f3491ee811} gain, despite reporting a narrow earnings miss.

Dow Jones Today: Intel, IBM Earnings

IBM nosedived 8.3{c34e2c9cd63a11c97fab811dbaaefe0cfbb1edd2527888e1a44d36f3491ee811} to the  bottom fo teh Dow Jones today. Revenue fell 6{c34e2c9cd63a11c97fab811dbaaefe0cfbb1edd2527888e1a44d36f3491ee811}, more than analyst estimates. Earnings retreated 56{c34e2c9cd63a11c97fab811dbaaefe0cfbb1edd2527888e1a44d36f3491ee811}, a smaller-than-expected drop. Total cloud revenue rose 10{c34e2c9cd63a11c97fab811dbaaefe0cfbb1edd2527888e1a44d36f3491ee811} to $7.5 billion. The company plans to spin off its $19 billion technology consulting unit under teh name NewCo.

IBM stock has recovered more than 45{c34e2c9cd63a11c97fab811dbaaefe0cfbb1edd2527888e1a44d36f3491ee811} from its 2020 bear-market low. But it remains 20{c34e2c9cd63a11c97fab811dbaaefe0cfbb1edd2527888e1a44d36f3491ee811} below a February 2020 high, and has been in a long-gterm downtrend since peaking in March 2013.

Intel stock is in the midst of a good month, trading more than 25{c34e2c9cd63a11c97fab811dbaaefe0cfbb1edd2527888e1a44d36f3491ee811} higher since the start of January. Shares have rebounded 41{c34e2c9cd63a11c97fab811dbaaefe0cfbb1edd2527888e1a44d36f3491ee811} off an October low, putting shares within 11{c34e2c9cd63a11c97fab811dbaaefe0cfbb1edd2527888e1a44d36f3491ee811} of their January 2020 high.  Technicalkly, the stock is just below a 65.21 buy point in a cup base.

But a weak relative strength and Composite Ratings suggest there are better chip stocks to buy.

Intel reported a 4{c34e2c9cd63a11c97fab811dbaaefe0cfbb1edd2527888e1a44d36f3491ee811} earnings dip and a 22{c34e2c9cd63a11c97fab811dbaaefe0cfbb1edd2527888e1a44d36f3491ee811} dive in earnings, both above forecasts. The company raised its cash dividend by 5{c34e2c9cd63a11c97fab811dbaaefe0cfbb1edd2527888e1a44d36f3491ee811} to $1.39 per share on an annual basis.

Advanced Micro, Xilinx Climb Ahead Of Earnings

Advanced Micro Devices (AMD) and Xilinx (XLNX) bucked the chip-sector declines early Friday.  IBD Leaderboard listing AMD clawed up a 2.2{c34e2c9cd63a11c97fab811dbaaefe0cfbb1edd2527888e1a44d36f3491ee811} gain. The stock has had some trouble capitalizing on a November breakout from a double-bottom base, flashing a sell rule as it gave up gains.  But shares are fighting to retake support at their 21-day moving average, and back in an actionable buy range that runs to 93.26.

Chip developer Xilinx is consolidating, attempting to regain support at its 10-week moving average.

AMD reports its fourth-quarter results and Xilinx reports fiscal third-quarter earnings after Tuesday’s market close.

Coronavirus Resurgence Slams Global Markets

Coronavirus clampdowns due to a resurgence in new infections this month in China have so far left 22 million housebound in several regions, more than double the number affected in the original Wuhan lockdown during the start of the outbreak a year ago. Districts of Beijing and several other cities are affected. Hong Kong is preparing to shutter its central financial district, and Shanghai has imposed lockdowns on two of its hospitals.

Meanwhile, the U.K.’s third lockdown is now expected to last possibly into the summer, according to Prime Minister Boris Johnson, who initially said the process should end in April. European Central Bank supervisor Kerstin af Jochnick said Thursday lockdowns across the euro zone point the region toward a possible double-dip recession. And the preliminary January purchasing managers index from researcher Markit showed euro zone business activity contracting at an accelerated pace, slipping to a two-month low.

Markets across Asia shifted sharply lower, with benchmarks in Hong Kong and Mumbai, India tumbling more than 1.5{c34e2c9cd63a11c97fab811dbaaefe0cfbb1edd2527888e1a44d36f3491ee811}. In Europe, Frankfurt’s DAX dropped 1.1{c34e2c9cd63a11c97fab811dbaaefe0cfbb1edd2527888e1a44d36f3491ee811} and Paris’ CAC-40 had sloughed off 1.4{c34e2c9cd63a11c97fab811dbaaefe0cfbb1edd2527888e1a44d36f3491ee811} near midday. London’s FTSE 100 traded down 0.9{c34e2c9cd63a11c97fab811dbaaefe0cfbb1edd2527888e1a44d36f3491ee811}.

EVgo Merges Into SPAC, Nio Gets A Buy Rating

Special purpose acquisition company Climate Change Crisis Real Impact I Acquisition (CLII) rocketed 49{c34e2c9cd63a11c97fab811dbaaefe0cfbb1edd2527888e1a44d36f3491ee811} higher in premarket trade Friday. The New Jersey-based company announced a deal to acquire electric vehicle charging station operator EVgo. CLII is an investment fund created by David Crane, former CEO of Texas-based power utility NRG Energy (NRG). NRG reportedly launched EVgo as an inhouse operation in 2010.

In July, General Motors (GM) announced a partnership with EVgo aimed at adding 2,700 new fast-charging stations at various locations across the U.S. The deal announced Friday revolves around a $575 million cash injection for EVgo. Some $175 million of that is to come directly from CLII, with the rest arranged through an investors group that includes Pacific Investment Management (PIMCO ) and BlackRock (BLK).

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CLII went public in November, and was trading 36{c34e2c9cd63a11c97fab811dbaaefe0cfbb1edd2527888e1a44d36f3491ee811} above its initial offering price at Thursday’s close.

Electric vehicle manufacturer stocks traded generally lower Friday. Tesla (TSLA) and Xpeng (XPEV) slipped 1.3{c34e2c9cd63a11c97fab811dbaaefe0cfbb1edd2527888e1a44d36f3491ee811} each. Li Auto (LI) dropped 2.3{c34e2c9cd63a11c97fab811dbaaefe0cfbb1edd2527888e1a44d36f3491ee811}.

China-based Nio (NIO) was the standout, up 0.6{c34e2c9cd63a11c97fab811dbaaefe0cfbb1edd2527888e1a44d36f3491ee811} after Nomura launched coverage with a buy rating and an 80.30 price target. Nio stock remains in a buy range above a cup base buy point at 57.30. The buy range runs to 60.17.

Growth Stocks Rally

Growth stock tracker Innovator IBD 50 ETF (FFTY) rallied more than 1{c34e2c9cd63a11c97fab811dbaaefe0cfbb1edd2527888e1a44d36f3491ee811} Thursday in a third straight daily advance. The fund is working on its third consecutive weekly gain, and has climbed 12.5{c34e2c9cd63a11c97fab811dbaaefe0cfbb1edd2527888e1a44d36f3491ee811} since the start of January — making it so far the fund’s strongest month since its inception in April 2015.

Stock Market ETF Strategy And How To Invest In The Current Uptrend

As with the Nasdaq, the Innovator IBD 50 fund’s advance leaves it extended more than 13{c34e2c9cd63a11c97fab811dbaaefe0cfbb1edd2527888e1a44d36f3491ee811} above its 50-day moving average. That makes the prospect of a pullback more likely.

Market’s Mixed Signals Continue

The stock market rally continued to send mixed messages Thursday, as the Dow flagged while the Nasdaq rallied to new highs.

The session also sent the Nasdaq Composite further into extended territory, now 8.1{c34e2c9cd63a11c97fab811dbaaefe0cfbb1edd2527888e1a44d36f3491ee811} above its 50-day moving average. That’s its biggest gap since Sept. 2. It is also worth noting the index is 4.1{c34e2c9cd63a11c97fab811dbaaefe0cfbb1edd2527888e1a44d36f3491ee811} above its 21-day exponential moving average. That is the widest margin about that line of support since shortly after the uptrend’s initial follow-through day on Nov. 4.

For more detailed analysis of the current stock market and its status, study the Big Picture.

The Nasdaq has recently tended to pullback and consolidate gains after rising 6{c34e2c9cd63a11c97fab811dbaaefe0cfbb1edd2527888e1a44d36f3491ee811} or more above its 50-day. Among the index’s most recent pullbacks, the index dropped 3.3{c34e2c9cd63a11c97fab811dbaaefe0cfbb1edd2527888e1a44d36f3491ee811} at the start of January to reconnect with its 21-day line. It dropped 9.6{c34e2c9cd63a11c97fab811dbaaefe0cfbb1edd2527888e1a44d36f3491ee811} in October, and 12.9{c34e2c9cd63a11c97fab811dbaaefe0cfbb1edd2527888e1a44d36f3491ee811} in September, both times cutting below its 50-day moving average.

The circumstances act as a caution sign, not as a signal for investors to turn defensive or head for the exits. It is a good time to lock in at least some profits in stocks and ETFs up more than 20{c34e2c9cd63a11c97fab811dbaaefe0cfbb1edd2527888e1a44d36f3491ee811}, weed out poor performers and maybe cinch stop loss levels a little tighter. The green light is still on for leaders passing buy points, but some breakouts among leaders have been running into trouble. Pyramiding into positions, or using options trading strategies are both good ways to protect capital.

Find Alan R. Elliott on Twitter @IBD_Aelliott


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Dow Jones Today, Futures Slump As IBM, Intel Drag; EVgo Merger, Nio Buy Rating In Focus