Look for that market rally signal; Look at Google, Microsoft, Datadog – .

Look for that market rally signal; Look at Google, Microsoft, Datadog – .

Dow Jones futures fell slightly on Tuesday night, as did S&P 500 and Nasdaq futures, with Palantir Technologies (PLTR) jumping late on a big army contract. Major indices rebounded Tuesday after Monday’s sell-off. But this attempted stock market rally is not yet a confirmed uptrend.


Actions Google, Microsoft (MSFT), datadog (DOG), Service now (NOW), Digital turbine (APPLICATIONS), A capital letter (COF), Dexcom (DXCM), Turn (RVLV) and parent UHaul America (UHAL) are among the actions to watch. Typically they maintain above or recover their lines for 50 days. However, APPS stock bounces off its 200-day line as parent company Google Alphabet (GOOGL) and Microsoft Stocks are trying to get back to their 50-day deadlines. But all of them have lines of relative force at or near the peaks.

Google, Microsoft and ServiceNow stock are on the IBD rankings while DDOG stock is on the rankings watch list. Google, Microsoft and NOW stocks are also among the long-term IBD leaders. DXCM and Datadog shares are on IBD 50. UHAL shares are IBD shares for Tuesday.

The video embedded in this article discusses Tuesday’s market action and analyzes Datadog, Microsoft, and DXCM stocks.

Palantir Army Contract

Meanwhile, Palantir announced that it had won an $ 823 million contract with the U.S. military.

“Palantir will deploy the Palantir Gotham platform to support Army Intelligence users worldwide with a globally federated intelligence data analysis and fabrication platform spanning multiple security classifications,” said the company in a press release.

PLTR stock jumped 14% in extended trading. This would push Palantir above its 50 and 200 day moving averages. PLTR stock edged up 0.2% to 23.21 on Tuesday.

Dow Jones Futures Today

Futures contracts on Dow Jones fell relative to fair value. S&P 500 and Nasdaq 100 futures fell 0.2%.

Keep in mind that overnight action on futures contracts on Dow and elsewhere doesn’t necessarily translate into actual trades during the next regular trading session.

Join the IBD experts as they analyze the exploitable stocks in the stock market rally on IBD Live

Attempted stock market rally

The stock market posted solid gains, although the major indices ended somewhat on highs while volume was low.

Meanwhile, the Dow Jones Industrial Average rose 0.9% in stock trading on Tuesday. The S&P 500 Index climbed just over 1%. The Nasdaq composite rose 1.25%. And the Russell 2000 small cap edged up 0.35%, just above its 200-day line and below its 50-day line.

Crude oil prices continued to rise. The 10-year Treasury yield climbed five basis points to 1.53%.

Among the top ETFs, the Innovator IBD 50 ETF (FFTY) gained 1.5%, while the Innovator IBD Breakout Opportunities (BOUT) ETF gained 1.2%. The iShares Expanded Tech-Software Sector (IGV) ETF rose 1.7%, with MSFT stock being a major component and ServiceNow a notable position. The VanEck Vectors Semiconductor (SMH) ETF rose 1.4%.

The SPDR S&P Metals & Mining ETF (XME) edged up 0.7% and the Global X US Infrastructure Development ETF (PAVE) rose 0.9%. The US Global Jets ETF (JETS) fell 0.7%. The SPDR S&P Homebuilders ETF (XHB) rose 0.2%. The Energy Select SPDR ETF (XLE) rose 0.6% and the Financial Select SPDR ETF (XLF) rose 2%.

Reflecting more speculative historical stocks, ARK Innovation ETF (ARKK) rose 1.7% and ARK Genomics ETF (ARKG) rose 1.2%. ARKK rebounded from a four-month low while ARKG rebounded from its worst levels since last November.

Five best Chinese stocks to watch right now

Actions to watch: Datadog, ServiceNow, Digital Turbine

Datadog stock rose 3.5% to 141.89, bouncing off its 10 week line and regaining its 21 day line. In a cheaper market, aggressive traders could use Tuesday’s move as a chance to start or increase a position in DDOG stocks.

ServiceNow stock was up 2.5% to 633.42, rebounding from its 50 days. At the end of this week, NOW stock is expected to have a flat base with a buy point of 681.20.

Digital Turbine stock jumped 6.1% to 73.56, rebounding from its 200 days. APPS stock rallied from its 200-day line in late September, then retreated with the market.

Stocks to watch: Capital One, Revolve, Dexcom, Amerco

COF stock rose 1.6% to 168.78. That’s just below a 171.60 handle cup buy point, according to MarketSmith analysis.

Revolve stock gained 5.5% to 65.77, resuming its 50-day line. The RVLV stock forms a mug base with handle with a buy point of 72.37. In a cheaper market, aggressive traders might have bought off the young adult clothing retailer on Tuesday as it broke a downtrend in its grip.

Dexcom stock jumped 2.65% to 540.39. Unlike many medical product companies, DXCM stock found support at its 50-day line, rebounding from that level on Tuesday. Monday’s low also coincided roughly with the high of a previous short consolidation.

UHAL stock rose 1.5% to 662, working on a buy point of 677.44. Amerco is in a flat base next to a longer consolidation.

Stocks to watch: Google, Microsoft

Google stock rose 1.8% to 2,720.46. It’s still below its 50-day line. Going above 50 days would be a key test, especially since GOOGL stock would also like to recover its 21 day line and break a short downtrend. Google has a flat base with a point of purchase of 2,925.17.

Microsoft stock shows similar action on the charts, up 2% to 288.76 on Tuesday. MSFT stock is below its 50 day line and has a fixed base buy point of 305.94.

Aside from their individual importance, if Google and Microsoft can recoup their 50-day lines and move towards breakouts, that would be a healthy sign for the stock rally attempt.

Market analysis

After the market close on Monday, the Nasdaq appeared to be oversold by some measures. So Tuesday’s rebound shouldn’t be too surprising, although it was nice to see tech stocks rebounding even with the 10-year Treasury yield up several basis points. The volume has decreased compared to Monday, which is not really inspiring. And it was only one day. Friday’s low-volume rebound resulted in some decent price gains, but those were wiped out on Monday.

Finally, the Dow Jones, S&P 500 and Nasdaq are all below their 21 and 50 day lines. It is not a good sign when the indices live below these levels.

Tuesday marked the first day of another attempted stock rally for the Nasdaq and S&P 500 indices. Both underestimated the recent lows on Monday.

But the Dow Jones hasn’t broken recent lows, so Tuesday marked the third day of its attempted rally. The Dow Jones could hold a monitoring day in the next few sessions, confirming the new uptrend.

A follow-up day occurs a few days after the start of a rally attempt. This implies a strong gain on one or more of the major indices in higher volume than the previous session, indicating that the major institutions are supporting a new uptrend. This confirms a new market rally. Not all confirmed rallies are successful, but it is a strong signal to enter the market.

Typically, tracking days are best on the S&P 500 and Nasdaq, but Dow Jones FTDs are valid. Also, with Energy and Financials among the top performing sectors right now, perhaps a rally led by the Dow Jones is appropriate.

In addition to energy and finance, fertilizer stocks are near highs, travel games are rebounding, recruiting companies are doing well as several trucking stocks are hovering near buying points.

Meanwhile, while some technologies such as DDOG stocks have found support on their 50-day lines, many others have not. Nvidia (NVDA), Break (SNAP) and, yes, Google stock is facing a key test.

Time the market with IBD’s ETF market strategy

What to do now

Well, a stock market rally attempt is underway, but it’s only the early days of a technological revival. Investors don’t need to try to rush into the market. And if this market rally has any real legs, there will be plenty of opportunities for investors after a confirmed market rally.

If you fancy adding exposure, you can try eating a green banana or a rock hard peach. If you still have an appetite for stocks, keep your positions small and be ready to exit quickly. Also consider buying a general ETF instead of an individual stock.

Now is the time to work on those watchlists. Focus on stocks with strong relative strength, holding or recovering key support levels. Depending on how long the market correction lasts, your watchlist can change dramatically.

Read The Big Picture every day to stay in tune with the market direction and major stocks and sectors.

Please follow Ed Carson on Twitter at @IBD_ECarson for stock market updates and more.


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