Dow Jones futures rose late Thursday, along with S&P 500 futures and Nasdaq futures, after a strong day for the post-coronavirus stock market with the Nasdaq turning positive for 2020. Roku (ROKU), Insulet (PODD), Trade Desk (TTD), Inphi (IPHI), Qualys (QLYS) and Avalara (AVLR) all reported earnings after the close.
Roku stock, Trade Desk stock, Insulet stock, Qualys stock and Avalara stock cleared buy points intraday Thursday just before earnings. But of these five “can’t-wait-for-earnings” breakouts, four fell overnight, while AVLR stock initially sank before moving slightly higher. The overall moves highlight that buying ahead of earnings is very risky.
Meanwhile, chip leader Inphi stock rose overnight. IPHI stock had closed well above its early-April breakout.
Several of these companies — including IPHI stock, TTD stock, QLYS stock and AVLR stock — have relative strength lines at or near record highs, a bullish sign. The RS line tracks a stock’s performance vs. the S&P 500 index. The RS line for Roku stock is not at a consolidation high, but is at a short-term peak.
Bring Your ‘A’ Game To Post-Coronavirus Stock Market Rally
Trade Desk stock, Qualys stock and Inphi stock boast 98 IBD Composite Ratings out of a best-possible 99. Avalara stock has a solid 91 Composite Rating, though it is not profitable. Insulet stock and Cloudflare stock have decent 81 Composite Ratings.
With so many stocks breaking out in the post-coronavirus market rally, investors should be focusing on A-quality names, with strong growth, institutional support and better chart patterns. Roku stock, which corrected 65% during the coronavirus market crash, has been a huge winner at times, but the money-losing stock is tremendously volatile.
Contrast that to profitable leaders such as Microsoft (MSFT), ServiceNow (NOW) and Apple (AAPL), which have corrected a relatively modest 31%, 34% and 35%, respectively. All three stocks have broken out over the last several sessions. Their RS lines are at record highs.
Microsoft stock and Apple stock are both trillion-dollar companies and members of the Dow Jones, S&P 500 index and Nasdaq composite. It doesn’t get much more institutional than that.
If you do buy more speculative names like Roku stock, keep them at a relatively small share of your portfolio.
Dow Jones Futures Today
Dow Jones futures rose 1% vs. fair value. S&P 500 futures climbed 1%. Nasdaq 100 futures advanced 1%. During the post-coronavirus stock market rally, Dow Jones futures have been less prone to the whipsaw moves of the recent market crash. But big overnight moves are not uncommon, with Dow futures picking up steam Thursday morning, foreshadowing Thursday’s strong market rally.
The April employment report will loom large over Dow Jones futures Friday, morning, coming out at 8:30 a.m. ET. Economists expect nonfarm payrolls plunged by 21.5 million, with unemployment soaring to 16.4%.
Coronavirus cases worldwide have topped 3.9 million. Covid-19 deaths have reached 270,000.
Coronavirus cases in the U.S. have climbed to 1.29 million, with deaths above 76,000.
Post-Coronavirus Stock Market Rally
The post-coronavirus stock market rally had yet another strong session.
The Dow Jones Industrial Average rose 0.9%, and the S&P 500 index tacked on 1.15%. The Nasdaq composite advanced 1.4% after topping 9,000 intraday.
The Nasdaq is now positive for 2020, a remarkable recovery from the coronavirus market crash. The Nasdaq’s 50-day moving average is set to turn higher on Friday, reinforcing the bullish trend for the post-coronavirus stock market rally.
Apple stock rose 1% and ServiceNow stock advanced 4.5%, both fractionally beyond the 5% chase zone. Microsoft stock edged up 0.6%, but has rallied 5.2% for the week. MSFT is still in range from a 180.10 handle in a double-bottom base.
Among the best ETFs, the Innovator IBD 50 ETF (FFTY) rallied 2.2%. The iShares Expanded Tech-Software Sector ETF (IGV) popped 2.6%, as software has been hot in the post-coronavirus market rally. Microsoft stock and ServiceNow stock are notable holdings. The VanEck Vectors Semiconductor ETF (SMH) rose 0.9%.
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Roku earnings came in at an adjusted loss of 45 cents vs. a 9-cent loss a year earlier. Revenue grew 55% to $320.8 million. Wall Street had forecast a 45-cent loss on sales of $306.7 million.
While profitability is a long way off, the streaming platform leader is seeing booming use during the stay-at-home coronavirus shutdowns. Operating costs shot up 76%.
Roku stock fell 10% overnight. In Thursday’s session, Roku stock popped 7.8% to 137.50, clearing a 135.57 handle buy point as well as a downward-sloping trend line.
Trade Desk Earnings
Trade Desk earnings surged 84% to 90 cents a share, with revenue up 33% to $160.7 million. Analysts expected Trade Desk earnings of 38 cents on sales of $158.3 million
The maker of digital advertising tools didn’t provide guidance due to the coronavirus.
Trade Desk stock retreated 5.4% overnight. TTD stock rose 3.3% Thursday to 322.50. Intraday, Trade Desk stock hit 327.35, briefly moving above a V-shaped cup-base buy point of 323.88, according to MarketSmith analysis.
Like Roku stock, Trade Desk stock is coming out of a deep base (58%). Unlike Roku stock, TTD stock is at a new high, so it doesn’t have overhead resistance. But by running up so fast from the bottom, Trade Desk stock is vulnerable to a pullback.
Insulet earnings turned out to be a 3-cent loss as revenue grew 24% to $198 million Analysts expected break-even Insulet earnings with sales at $190 million.
The insulin pump maker now sees 2020 revenue rising 15% in constant currency, at the low end of its February forecast for 15%-19% growth.
Insulet stock fell in extended trade, with a wide bid-and-ask spread. PODD stock rallied 4.2% to 215.15 on Thursday, breaking out from a 209.94 cup-with-handle buy point.
Insulet stock is one of a trio of diabetes products leaders. Dexcom (DXCM) has been the clear standout. Dexcom stock leapt 10% Thursday on news it’ll join the S&P 500 index. DXCM is well extended. Tandem Diabetes stock rose nearly 3%, running toward a buy point in a cup base.
Livongo, which makes remote monitoring products for chronic diseases including diabetes, is also in the general field.
Qualys earnings rose 33% to 65 cents a share. Revenue climbed 14.5% to $86.3 million. Wall Street expected Qualys earnings of 60 cents on sales of $85.8 million
The cybersecurity firm guided slightly higher on Q2 EPS but slightly lower for revenue.
Qualys stock plunged 8.4% overnight. QLYS stock popped 5.5% to 111.25 on Thursday, clearing a 110.99 alternative entry from a short consolidation. That was on top of a cup-base breakout with a 94.82 buy point.
Avalara earnings came in at a 5-cent loss vs. a 3-cent loss a year earlier. Revenue rose 31% to $111.4 million. Analysts expected an 11-cent loss on $108.4 million in revenue.
The maker of tax compliance automation software, citing the coronavirus crisis, guided slightly lower on Q2 revenue and roughly in line for full-year revenue.
Avalara stock initially sold off after hours, but rallied to move slightly higher. AVLR stock rose 9.3% to 101.76 on Thursday, breaking out above a 97.06 cup-base entry.
Inphi earnings leapt 88% to 62 cents a share as revenue surged 70% to $139.4 million. Analysts saw Inphi earnings at 57 cents on sales of $137.9 million.
The data-center chipmaker also guided higher for Q2 EPS and sales.
Inphi stock rose 11% overnight. IPHI stock climbed 2.75% to 98.97 on Thursday, near recent highs.
Inphi stock corrected 40% during the coronavirus market crash, but has roared back. Its RS line was already at new highs before Inphi stock broke out on April 3.
Please follow Ed Carson on Twitter at @IBD_ECarson for stock market updates and more.
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