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Individual Investors Ramp Up Bets on Tech Stocks

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Technology stocks have taken a beating this year. Many individual investors have used it as an opportunity to double down.

The Nasdaq Composite Index—home to the big tech stocks that propelled the market’s decadelong rally—has fallen 21% in 2022. Shares of

Amazon.com Inc.

AMZN 10.36%

and the parents of Google and

Facebook

META -1.01%

have suffered double-digit declines as well, stung by higher interest rates and souring attitudes about their growth prospects. 

Yet many of those stocks remain the most popular among individual investors who say they are confident in a rebound and expect the companies to continue powering the economy. 

In late July, purchases by individual investors of a basket of popular tech stocks hit the highest level since at least 2014, according to data from Vanda Research. The basket includes the FAANG stocks—Facebook parent Meta Platforms Inc., Amazon,

Apple Inc.

AAPL 3.28%

,

Netflix Inc.

and Google parent

Alphabet Inc.

GOOG 1.79%

—along with a handful of others like

Tesla Inc.

and

Microsoft Corp.

Meanwhile, Apple, chip company

Advanced Micro Devices Inc.

and the tech-heavy Invesco QQQ Trust exchange-traded fund have remained among the most popular individual bets since 2020. 

Interest in risky and leveraged funds tied to tech and stocks like

Nvidia Corp.

has also swelled, a sign that investors have stepped in to play the wild swings in the shares. 

It has been a fruitful bet for many. Tech stocks have been on the rebound of late, partly on investor hopes for a slower path of interest-rate increases in the months ahead. The Nasdaq gained 12% in July, its best month since April 2020, outperforming the broader S&P 500, which rose 9.1%.

Individual investor Jerry Lee says: ‘The market is severely undervaluing how much tech can actually play into our lives.’



Photo:

Peggy Chen

“I’m extremely bullish on tech,” said Jerry Lee, a 27-year-old investor in New York who co-founded a startup that helps people find jobs. “The market is severely undervaluing how much tech can actually play into our lives.” 

In coming days, investors will be parsing earnings reports from companies such as AMD and

PayPal Holdings Inc.

for more clues about the market’s trajectory. Data on manufacturing and the jobs market are also on tap. 

Mr. Lee said he recently stashed cash into a technology-focused fund that counts Apple and Nvidia among its biggest holdings, after years of pouring money into broad-based index funds. His experience working at firms such as Google has made him optimistic about the sector’s future, he said.

Gabe Fisher holds stock in Meta Platforms, Amazon and Alphabet.



Photo:

Ethan Kaplan

Even last week when many of the industry’s leaders, including Apple, Amazon and Alphabet, warned their growth is slowing, investors pushed the stocks higher and expressed confidence in the ability of the companies to withstand an uncertain economy. Apple logged its best month since August 2020, while Amazon finished its best month since October 2009, helped by a 10% jump in its shares on Friday alone.

Many investors also pounced on the tumble in shares of Facebook parent Meta Platforms. The stock was the top buy among individual investors on the Fidelity brokerage Thursday when it fell 5.2% in the wake of the social-media giant’s first-ever revenue drop. Tesla,

Ford Motor Co.

and leveraged exchange-traded funds tracking the tech-heavy Nasdaq-100 index were also widely traded that day.

Gabe Fisher, a 23-year-old investor near San Francisco, said he is holding on to stocks like Meta, Amazon and Alphabet. 

“Even if these companies never grow at as fast of a pace, they’re still companies that are so relevant and so prevalent that I’m going to hold on to them,” Mr. Fisher said.

He said he also has a small position in

Cathie Wood’s

ARK Innovation Exchange-Traded Fund that he doesn’t plan to sell soon, even though the fund has lost more than half of its value this year. 

Other investors have been turning to riskier corners of the market. Leveraged exchange-traded funds tracking tech have been the third- and fourth-most-popular ETFs for individual investors to buy this year, behind funds tracking the S&P 500 and Nasdaq-100 indexes. These funds allow investors to make turbocharged bets on the market and can double or triple the daily return of a stock or index.

Many individual investors have also turned to the options market to bet on tech. Bullish bets that would pay out if Tesla shares rose have been among the most widely traded in the options market, according to Vanda. Individual traders have spent more on Tesla call options on an average day this year than on Amazon, Nvidia and options tied to the Invesco QQQ Trust combined, according to Vanda. The firm analyzed the average premium spent on options that are out-of-the-money, or far from where the shares are currently trading. 

Jeff Durbin, a 59-year-old investor based in Naples, Fla., said he regrets missing out on buying big tech stocks decades ago.  

He has scooped up shares of companies like artificial intelligence firm

Upstart Holdings Inc.

and

Shopify Inc.

SHOP -3.01%

—and hung on despite their sharp swings. Shopify, for example, dropped 14% in a single session last week as it said it would cut about 10% of its global workforce. “It’s painful, but I missed out on things like Amazon and Netflix when they were cheap,” Mr. Durbin said. “Who is going to be the Amazon and Apple 20 years from now?”

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Business

Shopify Says It Will Lay Off 10% of Workers, Sending Shares Lower

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Shopify Inc.

SHOP -14.06%

is cutting roughly 1,000 workers, or 10% of its global workforce, rolling back a bet on e-commerce growth the technology company made during the pandemic, according to an internal memo.

Tobi Lütke,

the company’s founder and chief executive, told staff in a memo sent Tuesday that the layoffs are necessary as consumers resume old shopping habits and pull back on the online orders that fueled the company’s recent growth. Shopify, which helps businesses set up e-commerce websites, has warned that it expects revenue growth to slow this year.

Shopify’s shares fell 14% to $31.55 on Tuesday after The Wall Street Journal first reported on the layoffs. The shares have fallen more than 80% since they peaked in November near $175 adjusting for a recent stock split. The company reports quarterly results on Wednesday.

Mr. Lütke said he had expected that surging e-commerce sales growth would last past the Covid-19 pandemic’s ebb. “It’s now clear that bet didn’t pay off,” said Mr. Lütke in the letter, which was reviewed by the Journal. “Ultimately, placing this bet was my call to make and I got this wrong.”

The Ottawa-based company will cut jobs in all its divisions, though most of the layoffs will occur in recruiting, support and sales units, said Mr. Lütke. “We’re also eliminating overspecialized and duplicate roles, as well as some groups that were convenient to have but too far removed from building products,” he wrote. Staff who are being let go will be notified on Tuesday.

Shopify’s job cuts are among the largest so far in a wave of layoffs and hiring freezes that is washing over technology companies. Rising interest rates, supply-chain shortages and the reversal of pandemic trends, including remote work and e-commerce shopping, have cooled what was once a red-hot tech sector.

Shopify’s job cuts are the first big layoffs the company has announced since Tobi Lütke founded it in 2006.



Photo:

Cate Dingley/Bloomberg News

Netflix Inc.

cut about 300 workers in June as it deals with a loss in subscribers.

Twitter Inc.,

now mired in a legal standoff with

Elon Musk,

laid off fewer than 100 members of its talent acquisition team. Mr. Musk’s own company, electric-vehicle maker

Tesla Inc.,

late in June laid off roughly 200 people, after announcing it would cut 10% of salaried staff.

Other firms, including

Microsoft Corp.

and

Alphabet Inc.’s

Google, said they would slow hiring the rest of the year.

Tuesday’s announcement is Mr. Lütke’s first big move after Shopify’s shareholders approved a board plan to protect his voting power. The job cuts are the first big layoffs the company has announced since Mr. Lütke started the company in 2006.

Shopify’s workforce has increased from 1,900 in 2016 to roughly 10,000 in 2021, according to the company’s filings. The hiring spree was made to help keep up with booming business. E-commerce shopping surged during the pandemic, and many small-business owners created online stores to sell goods and services.

Shopify reported annual revenue growth of 86% in 2020 and 57% in 2021 to about $4.6 billion. However, the company reported a softening this year, and warned that 2022’s numbers wouldn’t benefit from the pandemic trends.

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In his memo on Tuesday, Mr. Lütke said, “What we see now is the mix reverting to roughly where pre-Covid data would have suggested it should be at this point. Still growing steadily, but it wasn’t a meaningful 5-year leap ahead.”

Shopify has been expanding its business in recent years to provide more services for merchants. It has developed point-of-sale hardware for retailers, launched a shopping app for its merchants to list products and created a network of fulfillment centers to ship orders for its business partners.

In May, Shopify agreed to buy U.S. fulfillment specialist Deliverr Inc. for $2.1 billion in cash and stock. It announced partnerships with Twitter in June and with YouTube earlier this month, allowing users to buy items that Shopify merchants post on those platforms.

Shopify is offering 16 weeks of severance to the laid-off workers, plus one week for every year of service.

Write to Vipal Monga at vipal.monga@wsj.com

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Business

Shopify Shares Hit Two-Year Low on Profit Miss, Softer Outlook

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(Bloomberg) — Shopify Inc. shares plunged to the lowest since April 2020 after it missed analysts’ profit estimates and announced the largest acquisition in its history, a $2.1 billion deal for delivery startup Deliverr Inc.

Most Read from Bloomberg

Shopify was down 17% to $403.39 as of 9:47 a.m. in New York. They’ve declined more than 70% this year.

The Canadian e-commerce software firm earned 20 cents per share on an adjusted basis in the first quarter, far short of analyst calls for 64 cents. The company gave a weaker outlook for adding new business customers in 2022, saying growth in merchants using the platform would be “comparable” to 2021.

E-Commerce Stocks Tumble Amid Deepening Malaise Over Earnings

E-commerce stocks have been pummeled this earnings season on concerns that online shopping is slowing as the Covid-19 pandemic fades. Amazon.com Inc. suffered the biggest one-day drop since July 2006 after it reported a weaker-than-expected revenue forecast. Wayfair, Etsy and EBay all dropped in premarket trading on Thursday.

Revenue rose 22% to $1.2 billion from a year earlier, but couldn’t match analyst expectations of $1.25 billion, according to data compiled by Bloomberg.

Gross merchandise volume, the value of merchant sales flowing through Shopify’s platform, grew 16% in the first quarter from a year earlier to $43.2 billion. Analysts, on average, expected $46.5 billion in GMV.

“While SHOP continues to give less specific guidance across key metrics, new merchant comment commentary was revised lower,” Citigroup analyst Tyler Radke said in a note to clients. “We expect the stock to trade down given the significant miss on GMV, profitability and continuation of headwinds into Q2.”

Shopify is contending with consumers returning to physical stores and rising inflation, as well as labor shortages, Chief Financial Officer Amy Shapero said.

“We saw lower merchant adds than last year and we largely attribute that to a very tight and transitional labor market,” Shapero told analysts. “We expect that the labour market will start to ease.”

Deliverr Deal

Shopify also reached a deal to acquire Deliverr to expand in fulfillment services, confirming an April 20 report by Bloomberg News. In January, Shopify canceled several fulfillment and warehouse contracts intended to create its own distribution network.

Shopify to Buy Deliverr for $2.1 Billion: M&A Snapshot

The purchase of Deliverr — which provides two-day delivery services for companies including Amazon, EBay, Etsy, and Walmart — more than doubles the size of Shopify’s fulfillment team. The transaction will be financed using 80% cash and 20% Shopify Class A shares.

“Being able to offer a delivery promise and fast fulfillment across all these channels boosts conversion,” Shapero said in a statement.

Shopify has had a rough start to the year. A parade of analysts slashed the company’s price target ahead earnings. In a bid to draw retail investors, Shopify announced in April plans to split its stock 10-for-1.

The company is also seeking to make governance changes that would give Chief Executive Officer Tobi Lutke a “founder share” that will preserve his voting power as long as he’s at the company, under certain conditions.

When asked why shareholders should vote in favor of the plan, Lutke pointed out his voting power will be capped at 40% and he’ll be forbidden from passing on the special share to his family.

“Shareholders can get some assurance that this is a structure that supports the founder-led-ness of the company,” Lutke said.

(Updates share price, details from conference call)

Most Read from Bloomberg Businessweek

©2022 Bloomberg L.P.

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Business

Generac, Shopify, La-Z-Boy and others

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Check out the companies making headlines before the bell:

Generac (GNRC) – The maker of generators and power equipment saw its stock rise 2.6% in the premarket after beating top and bottom-line estimates for the fourth quarter. Generac earned an adjusted $2.51 per share, 11 cents above estimates, as both commercial and residential sales increased more than 40%.

Shopify (SHOP) – Shopify fell 4% in premarket action despite reporting better-than-expected quarterly profit and revenue. The e-commerce platform operator said revenue growth for 2022 would be slower than the 57% it achieved in 2021.

Kraft Heinz (KHC) – The food maker’s stock was up 1.3% in the premarket after reporting its adjusted quarterly profit of 79 cents per share beat estimates by 16 cents. Revenue was also above Wall Street forecasts.

La-Z-Boy (LZB) – La-Z-Boy tumbled 12.5% in premarket trading after the furniture company reported a quarterly profit of 65 cents per share, well below the 89-cent consensus estimate. The company best known for its signature recliners noted multiple production issues related to Covid-19, leaving it unable to fully satisfy demand.

Wynn Resorts (WYNN) – Wynn Resorts reported a quarterly loss of $1.37 per share, wider than the $1.25 per share loss expected by Wall Street analysts, although the casino operator’s revenue beat estimates. A nearly 28% drop in Wynn’s Macau revenue weighed on overall results. Wynn fell 2.3% in the premarket.

Trade Desk (TTD) – The stock surged 10.5% in the premarket after the programmatic ad company reported adjusted quarterly earnings of 42 cents per share, 14 cents above estimates, with revenue also topping Wall Street forecasts.

Hilton (HLT) – The hotel operator missed estimates by 2 cents with adjusted quarterly earnings of 74 cents per share. Revenue was slightly above estimates as it more than doubled from a year earlier amid a travel recovery.

ViacomCBS (VIAC) – ViacomCBS announced it will change its corporate name to Paramount Global, effective Thursday, in an effort to emphasize its Paramount+ streaming service and to take advantage of Paramount’s brand recognition. Separately, the media company reported an adjusted quarterly profit of 26 cents per share, missing the 43-cent consensus estimate. Shares slumped 11.3% in premarket trading.

Airbnb (ABNB) – Airbnb reported record revenue for 2021, better-than-expected fourth-quarter results, and issued an upbeat current-quarter forecast. The home rental company benefited from consumer preferences shifting away from hotels during the pandemic and said current-quarter bookings are likely to exceed pre-pandemic levels for the first time. Airbnb shares rallied 3.5% in the premarket.

Roblox (RBLX) – Roblox stock plummeted 15.2% in premarket action after reporting a loss of 25 cents per share for its latest quarter, nearly double the 13-cent loss analysts had anticipated. The social gaming platform operator also saw lower-than-expected revenue amid flat daily active user metrics and engaged gaming hours that fell short of forecasts.

Cedar Fair (FUN) – Cedar Fair rejected a takeover bid from rival theme park operator SeaWorld Entertainment (SEAS), according to a statement by SeaWorld which confirmed earlier reports of an offer but did not acknowledge the reported $3.4 billion price. Separately, Cedar Fair reported better-than-expected quarterly revenue with record in-park spending by visitors. Cedar Fair stock slid 12.3% in the premarket, while SeaWorld fell 4.2%.

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Business

Dow Jones Futures: Market Rally Shows Broad Strength, Affirm Surges On Amazon Deal; Shopify, Palantir Near Buys

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Dow Jones futures will open Sunday evening, along with S&P 500 futures and Nasdaq futures. AFRM stock surged Friday night on the payment firm’s new alliance with Amazon.com (AMZN), as the “buy now, pay later” option booms online. Tesla rival Li Auto reports early Monday.




X



The stock market rally had a strong week, hitting record highs even as Fed chief Jerome Powell said a bond taper is likely to start soon.

Shopify (SHOP), Idexx Labs (IDXX), DocuSign (DOCU), Snap (SNAP) and Palantir Technologies (PLTR) are near buy points.

Affirm-Amazon Alliance

Amazon is teaming up with Affirm Holdings (AFRM) to offer an installment payment option at checkout. Affirm already has a relationship with Walmart (WMT) and many other websites. Still, AFRM stock shot up 36% Friday night in active trade on the news after rising 50% or more at one point. AMZN stock was little changed.

AFRM stock, which came public in January, has plunged from its February peak. But it was already up 20% so far this month, largely on the news that Square (SQ) would buy Australian “buy now, pay later” fintech AfterPay for $29 billion. SQ stock shot up in early August to record highs on the AfterPay deal and strong earnings, but pulled back to its 10-week line. Square stock could flash an aggressive entry with a decent gain next week, rebounding from the 10-week line further and clearing a downtrend.

Li Auto Earnings Due

Tesla (TSLA) rival Li Auto (LI) reports earnings before Monday’s open. Expect August sales next week from Li Auto and China EV rivals Nio (NIO), Xpeng (XPEV), BYD Co. (BYDDF). Li stock and Xpeng aren’t far from early entries in short consolidations, while BYD stock has an alternate handle in a long consolidation. Nio stock is trending lower.

Tesla China sales and exports for August will follow a little later. Tesla stock rose 4.65% to 711.92 last week, closing in on an aggressive buy point of 730.

DOCU stock, Tesla, Square and Snap are on IBD Leaderboard. DocuSign and SHOP stock are on SwingTrader. Snap stock is on the IBD 50. IDXX stock is on IBD Long-Term Leaders. Idexx Labs also was Friday’s IBD Stock Of The Day.

The video embedded is this article analyzes Shopify stock, Idexx Labs and CrowdStrike (CRWD), as well as reviewing the past week’s strong market rally.

Dow Jones Futures Today

Dow Jones futures will open at 6 p.m. ET on Sunday. So will S&P 500 futures and Nasdaq 100 futures.

Remember that overnight action in Dow futures and elsewhere doesn’t necessarily translate into actual trading in the next regular stock market session.

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

Coronavirus News

Coronavirus cases worldwide reached 216.20 million. Covid-19 deaths topped 4.49 million.

Coronavirus cases in the U.S. have hit 39.54 million, with deaths above 653,000.

Stock Market Rally

The stock market rally had a solid week, ending on a high note with the S&P 500 and Nasdaq at record highs.

The Dow Jones Industrial Average climbed nearly 1% in last week’s stock market trading. The S&P 500 index rose 1.5%. The Nasdaq composite popped 2.8%. The Russell 2000 jumped 5%.

The 10-year Treasury yield rose 5 basis points to 1.31% last week, but fell 3 basis points on Friday.

Among the best ETFs, the Innovator IBD 50 ETF (FFTY) leapt 6% last week, while the Innovator IBD Breakout Opportunities ETF (BOUT) jumped 4.1%. The iShares Expanded Tech-Software Sector ETF (IGV) gained 3.6%, with Snap stock and DocuSign notable components. The VanEck Vectors Semiconductor ETF (SMH) rose 6.1%.

SPDR S&P Metals & Mining ETF (XME) leapt 7.7% and Global X U.S. Infrastructure Development ETF (PAVE) advanced 3.45%. U.S. Global Jets ETF (JETS) rebounded 7.8%. SPDR S&P Homebuilders ETF (XHB) rose 3.2%. The Energy Select SPDR ETF (XLE) rallied 7.45% and the Financial Select SPDR ETF (XLF) finished 3% higher.

Reflecting more-speculative story stocks, ARK Innovation ETF (ARKK) ran up 5.3%, just getting above its 50-day Friday but still below its 200-day average. ARK Genomics ETF (ARKG) popped 6.5%, below both key levels.

Five Best Chinese Stocks To Watch

Shopify Stock

Shopify stock — after weeks of choppy action — has found support at its 50-day line, rising 5.6% to 1,531.42 last week. A strong rebound would offer a buying opportunity above last week’s high of 1,562. SHOP stock now has a new flat base with a 1,650.10 buy point, according to MarketSmith analysis on a weekly chart.

Idexx Stock

Idexx stock has drifted down to its 50-day/10-week line, slipping 2% last week to 668.27. As a Long-Term Leader, a rebound from the 10-week line would be a good place to start a position. Use Friday’s high of 681.25 as a buy point. Meanwhile, Idexx Labs now has a flat base with a 707.05 entry.

Snap Stock

Snap stock popped 3.8% last Monday, but rose 0.6% to 73.18 for the week. It’s just 3% above its 10-week line. A move above Thursday’s high of 74.95 would offer an early entry. Snap stock also has a flat base with a 79.28 buy point. That won’t show up on MarketSmith pattern recognition on the Aug. 10 reversal day.

Palantir Stock

PLTR stock has a bottoming base, a cup-with-handle pattern with a 26.04 buy point. Shares rose 7.1% to 25.71 last week, briefly touching 26.09. Palantir stock’s handle has formed right on top of the 200-day and 50-day moving averages.

Time The Market With IBD’s ETF Market Strategy

DocuSign Stock

DOCU stock jumped 5.2% last week to 300.76, rebounding from the 50-day and 10-week lines and reclaiming a 290.33 buy point. At 3% above its 10-week line and in buy range, DOCU stock is still actionable. DocuSign stock also has a flat base with a 310.61. As with Snap stock, just ignore the Aug. 10 reversal day on the DOCU stock chart.

However, investors likely should hold off on buying DOCU stock until after earnings Tuesday night.

Market Rally Analysis

The market rally had a strong week, continuing the rebound from the end of the prior week. The Nasdaq and S&P 500 hit record highs. The Russell 2000 reclaimed its 50-day and got above short-term levels, a positive sign for market breadth.

Volume wasn’t great, but trading often is meh in late summer.

Fed chief Jerome Powell backed tapering bond buys starting this year, with several other Fed officials backing an official decision at the September Fed meeting. Powell has been very careful in slowly walking toward a taper, providing a lot of early warning to avoid a “taper tantrum” by financial markets. So far that’s working, with stocks and bonds rallying Friday.

A number of leading stocks broke out or flashed buy signals over the last several days. The recent modest pullback and the broader sideways action over the past couple of months helped top stocks form bases and finding bullish support. While security software and a few retail earnings winners were big gainers last week, steel, financial, industrial and housing plays look strong.

The Nasdaq is not yet close to looking extended, suggesting more room to run.

Why This IBD Tool Simplifies The Search For Top Stocks

What To Do Now

The last several days should have delivered solid gains for investors, from existing positions and newer buys. While a lot of stocks extended gains or rebounded Friday, there weren’t many buying opportunities today. That’s OK. Most of the money is made in the sitting.

It’s definitely a time to work on your watch lists and look for stocks that are setting up, including Shopify, Snap and Palantir. Try to identify early entries. It’s a good way to at least start a position.

You could have added exposure over the last several sessions. Do you keep adding exposure? This is a confirmed stock market rally, but it’s not a roaring, unstoppable force. Ultimately, your exposure depends on your current level and your risk tolerance. While being fully invested or on margin can deliver big gains, the losses can be fast and furious. If you are going to “step on the gas,” be ready to put on the brakes quickly as well.

One way to free up capital for new buys is to take partial profits or cut some laggards. If a stock has spiked higher over the past few week or two or three, you might consider locking in a portion of those gains. Cutting laggards, as opposed to outright losers, is tricky with so much sector rotation. A stock that’s been moving sideways for a couple of weeks could suddenly start to move if the sector goes back in favor.

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

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

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Business

Dow Jones Futures: Nasdaq Hits Milestone; Shopify, Palo Alto, Airbnb Flash Buy Signals

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Dow Jones futures were little changed late Tuesday, along with S&P 500 futures and Nasdaq futures. The stock market rally continued its recent run Tuesday, with the Nasdaq topping the 15,000 level for the first time.




X



Shopify (SHOP), Palo Alto Networks (PANW), CrowdStrike (CRWD), Airbnb (ABNB), Facebook (FB), Mercado Libre (MELI) and Roblox (RBLX) were among those flashing buy signals. Meanwhile, “traditional” meme stocks GameStop (GME) and AMC Entertainment (AMC) spiked higher.

The S&P 500 and Nasdaq hit fresh all-time highs, while the Dow Jones nudged higher and the Russell 2000 moved toward a key level. A “risk on” mentality has taken hold since the major indexes hit intraday lows Thursday, testing key levels. There are some tentative signs that Covid cases may be leveling off, giving a boost to ABNB stock and other travel plays.

Palo Alto earnings and guidance not only triggered a PANW stock gap-up breakout, but it fueled other software security. CRWD stock also jumped on news that it will join the Nasdaq 100.

SHOP stock popped as the e-commerce software giant announced a new tie-up with TikTok. Shopify already works with Facebook, which also is flashing an aggressive entry.

While still well off record levels, AMC stock and GME stock blasted above their 50-day lines, rising 20% and 27.5%, respectively. These were arguably early entries on a technical basis. But both already looked extended from their 50-day lines, while still having overhead resistance. Meme stocks are prone to big moves up — and down.

Airbnb and MELI stock are on IBD Leaderboard. Shopify stock is on SwingTrader. ABNB stock was Tuesday’s IBD Stock Of The Day.

The video embedded in this article highlights SHOP stock, Airbnb and ZIM Integrated Shipping (ZIM), along with broader market rally analysis.

Dow Jones Futures Today

Dow Jones futures were flat vs. fair value. S&P 500 futures fell slightly and Nasdaq 100 futures edged up.

Remember that overnight action in Dow futures and elsewhere doesn’t necessarily translate into actual trading in the next regular stock market session.

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

Coronavirus News

Coronavirus cases worldwide reached 213.95 million. Covid-19 deaths topped 4.46 million.

Coronavirus cases in the U.S. have hit 38.96 million, with deaths above 648,000.

There are signs that U.S. cases may be starting to peak. Some Southern states with low vaccination rates are seeing a decline in new cases. Vaccinations have ramped up again in the U.S., especially in the South. Together with pre-existing vaccinations and infections as well as growing business and government restrictions, the tide could be close to turning.

Stock Market Rally

The stock market rally had a modest advance on the major indexes, while leading stocks outperformed.

The Dow Jones Industrial Average edged up 0.1% in Tuesday’s stock market trading. The S&P 500 index climbed 0.15%. The Nasdaq composite rose 0.5%. The small-cap Russell 2000 rallied 1%.

Among the best ETFs, the Innovator IBD 50 ETF (FFTY) climbed 0.7%, while the Innovator IBD Breakout Opportunities ETF (BOUT) rose 1.1%.

The iShares Expanded Tech-Software Sector ETF (IGV) advanced 0.7% even as key holding Microsoft (MSFT) dipped from record highs. Palo Alto and CRWD stock are IGV components. The VanEck Vectors Semiconductor ETF (SMH) edged up 0.1% after jumping 2.9% Monday on big moves from Nvidia (NVDA), AMD (AMD) and ASML (ASML).

SPDR S&P Metals & Mining ETF (XME) gained 2% and Global X U.S. Infrastructure Development ETF (PAVE) 0.8%. U.S. Global Jets ETF (JETS) leapt 3.1%. SPDR S&P Homebuilders ETF (XHB) climbed 1.4%. The Energy Select SPDR ETF (XLE) rallied 1.7% and the Financial Select SPDR ETF (XLF) rose 0.6%

Reflecting more-speculative story stocks, ARK Innovation ETF (ARKK) closed up 1.3% and ARK Genomics ETF (ARKG) 1.5%. ARKK is closing in on its 50-day and 200-day lines, but ARKG still is some distance from those key levels.

Five Best Chinese Stocks To Watch

Shopify Stock

SHOP stock climbed 3.85% to 1538.51, rebounding from its 50-day and 21-day lines and reclaiming a prior 1,499.85 buy point. Shares also broke a short downtrend. Shopify reached a TikTok deal, as “social commerce” continues to boom.

SHOP stock hit record highs in late June, then moved sideways in choppy fashion for several weeks, flashing various buy signals that quickly fizzled. It drifted below its buy point and 50-day line last week.

Shopify stock is on track to have a flat base with a 1,650.10 buy point after this week.

Palo Alto Stock

Palo Alto earnings and guidance were much better than expected Monday night, fueling strong share gains Tuesday. PANW stock gapped up 19% to 441.87 in massive volume, blasting past a consolidation going back six months.

Palo Alto stock is still within range of its 5-minute high after Tuesday’s open, so it’s buyable. However, earnings gap-ups haven’t worked especially well in the choppy market rally. Investors may want to see if PANW stock pulls back or consolidates for a time, then buy on a new bullish signal.

CRWD Stock

CrowdStrike stock jumped 8.1% to 265.63, gapping above its 50-day line and breaking a downtrend. CrowdStrike rallied on Palo Alto earnings but primarily on being added to the Nasdaq 100 index before Thursday’s open.

CRWD stock cleared a record high on June 22. Then, much like Shopify stock, it was up and down for several weeks. After hitting a record 272.63 on July 23, shares retreated, undercutting their 50-day line on Aug. 11 and then trending lower for several more sessions.

CRWD stock now has a short consolidation. If it can hold in its current range, it would have a short cup base after this week with a 272.73 buy point.

Keep in mind that CrowdStrike earnings are due on Aug. 31.

ABNB Stock

Airbnb stock leapt 10% to 161.42, vaulting from its 50-day line and breaking out of a bottoming base, a cup with handle with a 152.86 buy point. ABNB stock is now slightly extended from the buy zone, which runs to 160.50.

ABNB stock benefitted from renewed strength in highly valued growth names. But travel stocks generally, from Marriott (MAR) to Southwest Airlines (LUV), are rebounding in the past several days, as the delta variant wave of new Covid cases appears to be peaking.

Facebook Stock

Facebook stock edged up 0.6% to 365.51, continuing to rebound from Thursday’s intraday test of the 50-day and 10-week lines. At 2.8% above the 10-week line, FB stock is in range. Shares also have cleared a short downtrend. Investors also could use 366.95 as a short-term resistance level. At the end of this week, FB stock could have a flat base with a 377.65 buy point.

Mercado Libre Stock

MELI stock rose 2.5% to 1,855.29, breaking the downtrend of a handle, offering an early entry. Mercado Libre stock has an official cup-with-handle buy point of 1,899.43, according to MarketSmith.

Blowout Mercado Libre earnings spurred a 14% gain on Aug. 5, offering an initial aggressive entry. The handle began to form a few days later.

Roblox Stock

RBLX stock jumped 4.9% to 89.26, clearing short-term resistance and breaking the downtrend in a messy consolidation. Investors could use 87.62 as an early entry in a deep consolidation. The official buy point is all the way at 103.97. The video game software platform continues to have big daily and weekly swings following its IPO in March.

Market Rally Analysis

There’s nothing like a few positive sessions to transform the health of the stock market and individual portfolios. The stock market rally continued its rebound from Thursday intraday lows, when the Dow and S&P 500 rebounded from the 50-day line and the Nasdaq began to reclaim that key level. The S&P 500 and Nasdaq are at record highs while the Dow Jones is close. The Russell 2000 is still below its 50-day line, but is testing that key level again.

Growth stocks are leading new buy signals, with Shopify, Airbnb and Facebook among those.

While growth stocks flashed buy signals, market leadership has been shoring up after weakening dramatically during last week. Shipping stocks are breaking out. Steel stocks rebounded solidly for a second straight session. Financials rose modestly again, many still in buy zones. Industrials are nudging higher again with housing stocks bouncing, with some reclaiming or nearing buy zones.

Market breadth is improving, albeit from 2021 lows.

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What To Do Now

The past few days have certainly offered new buying opportunities, especially for investors who took profits or cut losses in the prior two weeks. Hopefully, this latest upswing will continue for some time, letting recent buys work and creating other entries.

Keep updating your watchlists, and don’t just look at growth stocks. While software and especially security software names have surged higher in the past couple of days, don’t get too concentrated in a particular group or sector.

While investors can play meme stocks, such as AMC stock or GME stock, the risks are higher. Meanwhile, many leading stocks with booming growth have raced higher from proper entries. Even if unprofitable, like ABNB stock, traditional growth stocks offer at least a plausible story toward long-term guys.

Don’t buy extended. It can be hard to watch stocks blasting beyond a buy zone and keep running, but buying extended raises the risk of a pullback that shakes you out or sucks you into much-bigger losses.

That’s especially true in the choppy market rally over the past several months.

Because it’s been a choppy market rally, with significant and frequent sector rotation, don’t get locked into a bullish or bearish mindset. If the rally struggles again or rotates away from growth, be ready to act.

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

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

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Dow Jones Futures Fall: Amazon, Shopify Lead 5 Techs In Buy Zones; Tesla Falls As China, Energy Stocks Hit Hard

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Dow Jones futures fell slightly late Tuesday, along with S&P 500 futures and Nasdaq futures. The stock market rally suffered losses as crude oil prices and other commodity futures retreated while Treasury yields slumped to a four-month low.




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Software and some tech megacaps continued to lead. CrowdStrike (CRWD), Zscaler (ZS), Shopify (SHOP), Bill.com (BILL) and Amazon.com (AMZN) broke out. A widespread ransomware attack gave a boost to cybersecurity plays such as CrowdStrike and ZS stock. The Pentagon canceled a $10 billion JEDI cloud-computing contract with Microsoft (MSFT), a likely win for Amazon.

China Stocks Slammed

China stocks were hard hit as Beijing extended a crackdown on ride-hailing giant Didi Global (DIDI) and two other recent U.S. IPOs, logistics platform Full Truck Alliance (YMM) and job-search app Kanzhun (BZ). That raised regulatory risk concerns for U.S.-listed Chinese companies, especially those like Didi that rely on user data.

DIDI stock plunged nearly 20% to 12.49, while YMM lost 6.7% and BZ 16%, all undercutting their IPO prices, at least intraday. Alibaba (BABA), which paid a record antitrust fine earlier this year, slumped 2.8%, near a 52-week low. Tencent (TCEHY) retreated 3.45% to its worst levels of the year. UP Fintech (TIGR) plunged 14%.

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Energy stocks dominated Tuesday’s biggest losers in the S&P 500 index. U.S. crude futures hit a six-year high overnight of $76.98 a barrel following an OPEC+ impasse, but closed Tuesday down 2.4% to $73.37 a barrel. Like crude oil prices, energy stocks have run up sharply in 2021. Most still look in good technical health, though few are in a good buying position right now.

Miners also retreated as copper turned lower, while agriculture stocks slumped as crop futures sold off. Tumbling 10-year Treasury yields hit financials.

Meanwhile, Tesla (TSLA) retreated 2.85% to 659.58, a relatively large drop for a non-China, non-energy stock. That could reflect Beijing’s ire vs. the electric-vehicle giant, while the New York Times ran a front-page story on a lawsuit vs. Tesla over an Autopilot-related death of a 15-year-old boy in another car. TSLA stock is now below a recent consolidation formed after moving above its 50-day line and downward-sloping trend line in late June. Shares are close to testing that trend line as well as its 50-day line, which is about to converge with the 200-day average. At this point, investors looking for an early entry in TSLA stock might target last Friday’s intraday high of 700.

CrowdStrike, Shopify, Microsoft and Tesla stock are on IBD Leaderboard. SHOP stock and Bill.com are on SwingTrader. MSFT stock is on IBD Long-Term Leaders. CrowdStrike and ZS stock are on the IBD 50. CrowdStrike was Friday’s IBD Stock Of The Day, while MNDY stock was Friday’s.

Dow Jones Futures Today

Dow Jones futures fell 0.2% vs. fair value. S&P 500 futures dipped 0.1%. Nasdaq 100 futures sank 0.1%.

Remember that overnight action in Dow futures and elsewhere doesn’t necessarily translate into actual trading in the next regular stock market session.

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

Stock Market Rally Tuesday

The stock market rally had a mixed session, but rallied off lows.

The Dow Jones Industrial Average sank 0.6% in Tuesday’s stock market trading. The S&P 500 index dipped 0.2%. The Nasdaq composite rose 0.2%. The big-cap Nasdaq 100, led by Apple (AAPL) and especially Amazon stock, climbed 0.4%. The small-cap Russell 2000, with many energy and financial losers, skidded 1.45%.

The 10-year Treasury yield slid 6 basis points to 1.37%.

Software and tech megacaps fared well, while many other sectors did not.

Among the best ETFs, the Innovator IBD 50 ETF (FFTY) dipped 0.3%, weighed down by some China names, while the Innovator IBD Breakout Opportunities ETF (BOUT) gained 1.1%.  The iShares Expanded Tech-Software Sector ETF (IGV) advanced 1.1%. MSFT stock is a major IGV holding while Crowdstrike and Zscaler are also holdings, but not Shopify stock. The VanEck Vectors Semiconductor ETF (SMH) closed just below break-even.

SPDR S&P Metals & Mining ETF (XME) tumbled 3.1% and Global X U.S. Infrastructure Development ETF (PAVE) gave up 1.7%. U.S. Global Jets ETF (JETS) slid 1.6%. SPDR S&P Homebuilders ETF (XHB) fell 1.4%. The Energy Select SPDR ETF (XLE) gave up 3.25% and the Financial Select SPDR ETF (XLF) 1.6%.

Reflecting more-speculative story stocks, ARK Innovation ETF (ARKK) fell 0.7% and ARK Genomics ETF (ARKG) 1.5%. Tesla stock is the No. 1 holding across ARK Invest’s ETFs.

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Amazon Stock

Amazon stock jumped 4.7% to 3,675.74, clearing a cup-with-handle buy point of 3,524.96, according to MarketSmith analysis. AMZN stock’s buy zone runs to 3,701.21. Shares hit a record high in heavy volume after consolidating for the past 10 months. AMZN stock already flashed an early buy signal on Friday.

The relative strength line for Amazon stock, after lagging for nearly a year, hit a consolidation high on Tuesday’s move. The RS line, the blue line in the charts provided, tracks a stock’s performance vs. the S&P 500 index.

On Tuesday, the Pentagon announced it was scrapping the $10 billion JEDI contract awarded to Microsoft in 2019. Amazon had challenged the cloud-computing deal. The Defense Department now plans on a new contract, with Amazon and Microsoft the only qualified potential bidders, it said.

AMZN stock had already broken out when the JEDI news broke, giving shares an extra lift. All in all it was a good first day for Andy Jassy, who took over from Jeff Bezos as CEO on Tuesday. Jassy had run Amazon Web Services.

Microsoft stock closed up 1 cent to 277.66 after edging out to a record intraday high. Shares rose 4.8% last week, the sixth straight weekly gain, pushing slightly beyond a 5% buy zone that ends at 276.45.

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CrowdStrike Stock

CRWD stock rose 4.9% to 264.98, clearing a mini-consolidation right at the prior base with a 260.92 buy point. Volume was strong. On June 10, CrowdStrike stock cleared resistance just above 227, offering at least an early entry, running up to the top of the consolidation before pausing.

A new ransomware attack linked to Russian cyber-gang REvil is raising expectations for more government and corporate spending on cybersecurity.

Zscaler Stock

ZS stock popped 4.8% to 225, closing above the 234.04 handle buy point on a weekly chart. On June 10, Zscaler stock jumped above resistance just below 200. Arguable, the 199.60 entry was a legitimate double-bottom buy point.

Shopify Stock

Shopify stock leapt 5% to 1,538.03, a record closing high. Investors could use the original 1,499.85 cup-base buy point as an entry. If one drew a downward-sloping trend line from the June 21 peak of 1,552.23, the entry point would be roughly the same. An alternate entry is 1552.23 + 10 cents. Like CRWD stock, Shopify cleared an early entry in the first half of June, then quickly ran to new highs before pausing in tight fashion.

Shopify earnings and sales growth have boomed over the pandemic, but comparisons are expected to get a lot harder.

Bill.com Stock

Bill.com stock rose 2% to 188.36, breaking a downward-sloping trend line in its handle, offering an early entry. The official cup-with-handle buy point is 192.99.

Bill.com is not yet profitable, but revenue growth is accelerating.

Market Rally Analysis

Looking at the Nasdaq, the stock market rally had a positive session. The tech-heavy index rebounded from modest losses to close slightly higher, while Amazon and several software names broke out. A slim move kept the Nasdaq at 5.5% above its 50-day line, not quite extended. The Nasdaq 100, which had a better day, is now 6.7% above its 50-day.

The S&P 500 dipped, ending a seven-day win streak of mostly slim gains.

The Dow Jones fell, but found support near its 50-day line and closed well off lows. The Russell 2000 tumbled 1.4%, though it did close just above its 50-day line.

China stocks could be under pressure for some time. U.S. investors are likely to demand a higher discount on Chinese stocks, especially new IPOs, due to stepped-up regulatory risk.

Commodity-related stocks are struggling, though energy groups to a much-lesser extent.

But while there were losers Tuesday, there were many winners too. In addition to AMZN stock, CrowdStrike and the others highlighted here, medical stocks Dexcom (DXCM), Insulet (PODD) and Progyny (PGNY) flashed various buy signals, though volume was light. Several other names, including in software, showed intriguing action.

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What To Do Now

It’s a stock picker’s market, but you have to be choosy. And with sector rotation and daily swings still alive, investors have to make decisions about when to take whole or partial profits, while not letting losses get out of hand.

Sometimes you swing for the fences, other times you might try for a single and “manufacture” a run or two. In 2021, the market has generally favored the latter strategy. If you take a swing and you end up with a big winner, be thankful.

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

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

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