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Dow Jones Futures: Tech Futures Tumble As Treasury Yields Spike On Inflation Fears; Williams-Sonoma Breaking Out

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Dow Jones futures were little changed early Thursday while S&P 500 futures fell solidly and Nasdaq futures tumbled, as the 10-year Treasury yield moved above 1.7% for the first time since January 2020. That comes amid concerns that the Federal Reserve and other central banks will let inflation pick up too fast.




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That’s a reversal from Wednesday, when a dovish Fed meeting policy statement and comments from Fed chief Jerome Powell spurred a stock market rally. The Dow Jones hit a record while the Nasdaq reversed higher as Treasury yields pared sharp gains.

Williams-Sonoma (WSM), Five Below (FIVE) and Upstart Holdings (UPST) headlined key earnings after the close. Meanwhile, Translate Bio (TBIO) and Lordstown Motors (RIDE) also moved on news.

Treasury Yields Spike

The 10-year Treasury yield jumped 9 basis points to 1.73%, as the day two reaction to the Fed meeting was a lot different than on Wednesday. On Wednesday, the Federal Reserve signaled it won’t start rate hikes before 2024, unchanged from before. Fed chief Jerome Powell said it’s not time to talk about tapering the central bank’s big asset purchases.

That’s despite more bullish economic forecasts, as coronavirus restrictions wane and stimulus checks go out from the new $1.9 trillion spending package.

The Fed sees 2.4% inflation this year, but cooling to 2% in 2022. The Fed has a 2% inflation target, but says it’s OK with price increases exceeding that level for a short time.

The 10-year Treasury yield hit 1.69% before the Fed meeting announcement. The 10-year yield ended up 2 basis points to 1.64%, slightly below were it was before the 2 p.m. ET Fed announcement.

But while the Fed’s calm over inflation soothed investors on Wednesday, that didn’t last long.

If the Fed isn’t worried about inflation, bond traders will. With commodity prices high and U.S. retail gasoline prices now up for 46 straight days, some underlying inflation pressures are bubbling up.

Dow Jones Futures Today

Dow Jones futures was about flat vs. fair value. S&P 500 futures fell 0.6%. Nasdaq 100 futures plunged 1.65%. The Nasdaq composite will likely test its 50-day moving average again.

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 121.94 million. Covid-19 deaths topped 2.69 million.

Coronavirus cases in the U.S. have hit 30.29 million, with deaths above 550,000.

Stock Market Rally Today

U.S. Stock Market Today Overview
Index Symbol Price Gain/Loss % Change
Dow Jones (0DJIA) 33016.16 +190.21 +0.58
S&P 500 (0S&P5) 3974.16 +11.45 +0.29
Nasdaq (0NDQC ) 13525.20 +53.63 +0.40
Russell 2000 (IWM) 232.37 +1.87 +0.81
IBD 50 (FFTY) 47.63 +0.42 +0.89
Last Update: 4:22 PM ET 3/17/2021

The stock market rally traded mixed to lower for much of the session before the major indexes rallied together following the Fed meeting and Powell.

The Dow Jones Industrial Average rose 0.6% in Wednesday’s stock market trading. The S&P 500 index advanced 0.3%. The Nasdaq composite climbed 0.4% after slumping nearly 1.5% intraday.

The 10-year Treasury yield, which jumped to a 13-month high of 1.69%, pared gains to 1.64%.

Among the best ETFs, the Innovator IBD 50 ETF (FFTY) rallied 0.9%, while the Innovator IBD Breakout Opportunities ETF (BOUT) climbed 1.3%. The iShares Expanded Tech-Software Sector ETF (IGV) dipped 0.2%. The VanEck Vectors Semiconductor ETF (SMH) advanced 0.9%.

Reflecting more-speculative story stocks, Ark Innovation ETF rose 0.75% and Ark Genomics ETF 1.1%. But both ARK ETFs are down nearly 2% in premarket trade, as Tesla (TSLA) and many other highly valued holdings retreat with spiking Treasury yields.

Key Earnings

Williams-Sonoma reported better-than-expected earnings and a third straight quarter of accelerating revenue growth. The upscale home furnishings and housewares retailer reported same-store growth above 20% in all its chains. Williams-Sonoma also announced a $1 billion buyback and an 11% dividend hike.

WSM stock surged 11% in premarket trade, signaling a move above a 151.26 buy point from a seven-week cup base, according to MarketSmith chart analysis. Williams Sonoma also has a 140.24 early entry from a handle that’s too low in the base to be valid.

WSM stock is part of the IBD 50.

Five Below earnings also beat while guidance was far above views. FIVE stock popped 5% early Thursday, back past a 198.20 flat-base buy point in a base-on-base pattern.

Upstart Holdings easily beat EPS views but revenue slightly missed. The AI lending platform guided higher. Upstart also announced it’ll buy Prodigy, a retail automotive retail software maker. UPST stock skyrocketed 37% early Thursday. That’ll send Upstart stock far above its 50-day line but still below its Feb. 11 peak of 105.58.

Technically, Lordstown Motors reported earnings, but the EV pickup startup has essentially zero revenue. Lordstown said its Endurance full-size pickup will start production in September, with the first beta vehicles ready for testing by the end of this month. An electric van should start output in late 2022. But Lordstown also disclosed an SEC probe. That comes after Hindenburg Research accused Lordstown of fraud. RIDE stock, which plunged last week on the Hindenburg report, fell 5% before the open.

Finally, Translate Bio reported weak results for its cystic fibrosis treatment. TBIO stock plunged 26% in premarket trade. Translate Bio stock had been holding its 21-day and 50-day lines.

Stock Market Rally Analysis

The Fed decision and Fed chief Powell’s comments initially gave a much-needed boost. The Nasdaq was undercutting the 50-day line Wednesday and testing its 21-day, before rebounding on the policy statement and Powell. Some big 2020 winners such as CrowdStrike (CRWD) and Twilio (TWLO) rebounded from their 50-day tests. Meanwhile, some recent breakouts and stocks flashing early buys shored up, including MKS Instruments (MKSI), Westlake Chemical (WLK) and 5G chipmaker Qorvo (QRVO).

But as Nasdaq futures today show, the stock market rally remains sensitive to Treasury yields, especially growth names. All of Wednesday’s gains, and then some, could be undone. The tech sector remains a work in progress. If the Nasdaq composite drops below the 50-day line and continues selling, tech stocks are going to come under heavy pressure.

Meanwhile, reopening plays have made big moves. Many are above pre-coronavirus levels, even though earnings are likely to be well below pre-pandemic reports. So don’t get too carried away.

Focus on stocks that are trading above their 21-day and 50-day moving averages.

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 Steady, Tech Futures Tumble As Treasury Yields Pop Before Fed Meeting; Plug Power Dives On Accounting

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Dow Jones futures edged higher early Wednesday, while S&P 500 futures and especially Nasdaq futures fell as Treasury yields hit 13-month highs ahead of this afternoon’s Fed meeting announcement.




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The stock market rally finished narrowly mixed Tuesday after the Nasdaq closed well off intraday highs. Plug Power (PLUG) and CrowdStrike stock headlined key overnight movers.

CrowdStrike (CRWD), Coupa Software (COUP), Smartsheet (SMAR) and Lennar (LEN) headlined earnings late Tuesday, with Chinese e-commerce giant Pinduoduo (PDD) reporting early Wednesday. Plug Power stock plunged on accounting isues.

Microsoft stock, MKS Instruments (MKSI), Applied Materials (AMAT) and Apple (AAPL) iPhone chipmakers Qorvo (QRVO) and Skyworks Solutions (SWKS) all flashed buy points at least intraday.

Chip-equipment maker MKS Instruments broke out past a buy point Tuesday. Chip-gear giant AMAT stock flashed an early entry, along with wireless chipmakers Qorvo and Skyworks Solutions.

Microsoft (MSFT) rose, flashing additional buy signals. Google parent Alphabet (GOOGL) also climbed slightly and is potentially actionable. Apple stock and Facebook (FB) rose but may need more repair time.

Amazon.com (AMZN) closed near lows, stuck around its 200-day line. Tesla (TSLA) hit resistance and retreated, still well below its 50-day line.

All of these stocks came off highs, with some closing near session lows as the Nasdaq lost steam.

Take Advantage Of Leaderboard Free Access Week

Plug Power Stock Dives

After the close, Plug Power said it would have to restate 2018 and 2019 financial statements, as well as quarterly statements for 2019 and 2020. The fuel cell company cited accounting errors related to non-cash items, including some costs. But it said there was no misconduct. PLUG stock plunged 16% in premarket trading. Shares sank 8.1% on Tuesday, hitting resistance at its 21-day line.

Key Earnings

CrowdStrike earnings and revenue were better than expected, while the cybersecurity leader also guided higher. CRWD stock gained 3% early Wednesday. Shares hit resistance at the 21-day line Tuesday and reversed lower for a 2.1% loss.

Coupa earnings and sales also topped views. COUP stock edged lower in premarket trade after rising late Tuesday. Shares fell 3.5% on Tuesday.

Smartsheet earnings and revenue beat forecasts. SMAR stock advanced 2% before the open. Shares rose 1.4% on Tuesday to 68.71, backing off key levels intraday.

Pinduoduo reported a smaller-than-expected loss while revenue surged 163%, far above estimates. PDD stock lost 4% early Wednesday after rising 1.1% to 160.89 on Tuesday.

CRWD stock, Coupa stock and Smartsheet, along with Pinduoduo, are former leaders that sold off sharply in the recent tech sell-off. They all closed below their 50-day moving averages, with COUP stock below its 200-day line.

Lennar earnings also exceeded analyst estimates. LEN stock edged lower in premarket trade. Shares fell 1.5% to 88.71. Lennar stock is several weeks into a consolidation next to a prior base. A move above last week’s high of 92.85 — the top of a quasi-handle — could offer an early entry.

Google stock and Microsoft are on IBD Leaderboard. AMAT stock and Google are on SwingTrader and the Big Cap 20. MSFT stock  is an IBD Long-Term Leader. Google, SWKS and TSLA stock are on the IBD 50. MKSI stock was Tuesday’s IBD Stock Of The Day.

Fed Meeting In Focus

The Federal Reserve will end its two-day policy meeting Wednesday, with an announcement at 2 p.m. ET. Investors will be looking for clarity from the central bank and Fed chief Jerome Powell regarding inflation and rising Treasury yields, which have hit growth stocks. Will the Fed enact, or signal a move toward, reviving “Operation Twist” to drive down long-term Treasury yields? While the Fed has said it’s far away from even curbing bond buys, will policymakers signal optimism about the economic outlook, worrying traders?

Dow Jones Futures Today

Dow Jones futures rose 0.1% vs. fair value. S&P 500 futures fell 0.3% while Nasdaq 100 futures retreated 1.1%.

The 10-year Treasury yield rose several basis points to 1.67%, at 13-month highs.

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 and special guest David Ryan as they analyze actionable stocks in the stock market rally on IBD Live.

Coronavirus News

Coronavirus cases worldwide reached 121.39 million. Covid-19 deaths topped 2.68 million.

Coronavirus cases in the U.S. have hit 30.23 million, with deaths above 549,000.

Moderna (MRNA) has begun dosing children aged six months to less than 12 years old with its coronavirus vaccine in a phase 2/3 study. Moderna and Pfizer (PFE) are already testing their vaccines in older children.

Stock Market Rally

U.S. Stock Market Today Overview
Index Symbol Price Gain/Loss % Change
Dow Jones (0DJIA) 32824.90 -128.56 -0.39
S&P 500 (0S&P5) 3962.64 -6.30 -0.16
Nasdaq (0NDQC ) 13471.57 +11.86 +0.09
Russell 2000 (IWM) 230.44 -3.98 -1.70
IBD 50 (FFTY) 47.21 -0.25 -0.53
Last Update: 4:06 PM ET 3/16/2021

The stock market rally closed with minimal changes but it was a disappointing day for the Nasdaq and growth names.

The Dow Jones Industrial Average fell 0.4% in Tuesday’s stock market trading. The S&P 500 index dipped 0.1%. The Nasdaq composite edged up 0.1%, after rising as much as 1.2% intraday and briefly turning negative. The small-cap Russell 2000 sank 1.7%.

10-year Treasury yield rose 1 basis point to 1.62% after dipping intraday to 1.585%.

Financials, airlines and commodity plays pulled back while growth names faded to close mixed.

Among the best ETFs, the Innovator IBD 50 ETF (FFTY) lost 0.5%, while the Innovator IBD Breakout Opportunities ETF (BOUT) sank 0.9%. The iShares Expanded Tech-Software Sector ETF (IGV) dipped 0.5%, with MSFT stock its top holding. The VanEck Vectors Semiconductor ETF (SMH) gained 1.1%, with Qorvo and SWKS stock both notable components.

Reflecting more-speculative story stocks, Ark Innovation ETF slid 1.7% and Ark Genomics ETF 2.2%. Tesla stock is the top holding across Ark Investments’ ETFs. Ark Invest bought some PDD stock ahead of its earnings.

Tech Titans

Microsoft stock rose 1.2% to 237.71, rebounding from its 21-day exponential moving average and 10-week lines once again. Shares are still in range from the 232.96 buy point, according to MarketSmith analysis. MSFT stock is on track to have a flat base at the end of this week with a 246.23 entry.

Google stock advanced 1.4% to 2,083.89, once again rebounding from its 21-day line. Shares got to 2,113.68 intraday, just below very recent highs. Investors could take an early entry at current levels or above Tuesday’s highs. The official buy point is 2,145.24 from a three-weeks-tight pattern — or a flat base after this week.

Apple stock climbed 1.3% to 125.57, above its 21-day line and breaking a downtrend. But the iPhone giant is still below its now-falling 50-day.

Facebook stock rose 2% to 279.28, continuing a rebound from its 10-, 21-, 50- and 200-day lines. FB stock got right to a trend line starting with the Aug. 26 all-time high of 304.67. Investors could buy Facebook if it gets above Tuesday’s high, but they might want to wait for shares to at least clear the Jan. 28 peak of 286.79.

Amazon stock edged up 0.3%, but hit resistance at its 200-day.

Tesla stock fell 4.4% to 676.88, hitting resistance at its 21-day line. It’s still significantly below its 50-day line and its Jan. 25 peak of 900.40. TSLA stock fell 3% early Wednesday.

This could be just a breather for Tesla stock stock, which jumped 16% last week. But perhaps not.

While TSLA stock is struggling to rebound, Volkswagen (VWAGY) has been soaring as it announces big EV targets in 2021 with major battery investments. VWAGY stock jumped 10% on Tuesday to its best level since 2009. Shares are up 57% so far in 2021.

Chip Stocks In Buy Zones

MKSI stock popped 3.4% to 177.91, just closing above a 177.46 double-bottom buy point after reaching 182.14 intraday.

AMAT stock rose 3.15% to 118.50, rebounding from its 21-day line and breaking a short downtrend. It’s 7% above its 10-week line, still in range.

Qorvo stock rose 1.3% to 180.54, near the day’s lows after hitting 185.76 intraday. Shares did close above a downtrend and it’s only 3.1% above its 10-week average. But investors might want to wait for Qorvo stock to move back above the March 2 high of 182.75. Also, the 5G chipmaker has an official 191.92 consolidation buy point.

SWKS stock rose 1.3% to 181.04, closing near session lows. But shares broke a downtrend and continued a rebound from the 10-week line, just 3.6% above that key level. The wireless chipmaker held up well in the tech sell-off, not losing sight of its 50-day/10-week lines.

Stock Market Rally Analysis

The Nasdaq moved a bit further above its 50-day line, though closing well off intraday highs. More tech stocks, especially chips, are setting up again.

But highly valued or speculative growth names generally have more work to do. That includes Tesla stock, Plug Power, CrowdStrike and others that have rebounded off recent lows, as well as names such as Zoom Video (ZM) that haven’t bounced much at all. In general, investors want to focus on stocks above their 21-day and 50-day averages.

Meanwhile, the Dow Jones and Russell 2000 fell, but after long winning streaks.

Many economy reopening plays, including travel, energy and mining, saw pullbacks Tuesday. But generally those sectors are still doing well.

Ideally, the stock market rally will show broad leadership, across a range of growth and real economy sectors. But it could be that the market will rotate back to techs, or that techs will falter once again.

Investors should be taking advantage of the resumed market uptrend, with many quality stocks breaking out or offering early entries. In this broad but uncertain stock market rally, diversifying your portfolio is especially important. Buy leading stocks from leading sectors, as always, but make sure there’s some variety. That will help you avoid big portfolio losses while also keeping you in tune with a variety of sectors.

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: Stock Market Rally Sells Off; GME Stock, AMC Tumble Late, Apple, Facebook, Tesla Report

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Dow Jones futures were little changed Thursday night while S&P 500 futures and Nasdaq futures fell modestly, as Apple stock, Tesla (TSLA) and Facebook (FB) headlined a huge earnings night. The stock market rally suffered significant losses Wednesday, with selling resuming after the latest Fed meeting. Leading stocks struggled once again.




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Meanwhile, GameStop (GME) more than doubled once again, while AMC Entertainment (AMC) quadrupled as Reddit-led investors continue to rush into GME stock and other heavily shorted tickers. Express (EXPR) and Koss Corp. (KOSS) also had triple-digit gains.

GME stock, AMC stock, EXPR stock and KOSS stock fell sharply overnight as the Wallstreetbets Reddit chat room briefly went privat.

Apple (AAPL), Facebook stock and Tesla reported earnings late Wednesday, along with ServiceNow (NOW) and chip-equipment maker Lam Research (LRCX).

Apple earnings, Facebook earnings, ServiceNow earnings and Lam Research earnings all topped views. Tesla earnings fell short.

In overnight trade, Apple stock fell modestly after closing in range above a buy point. LRCX stock was little changed. NOW stock rose in extended trade. FB stock and Tesla stock retreated.

Apple, ServiceNow and Tesla stock are on IBD Leaderboard. ServiceNow stock is on IBD Long-Term Leaders. LRCX stock and Teradyne are on the IBD 50, along with many other chip plays.

Dow Jones Futures Today

Dow Jones futures were about flat vs. fair value. S&P 500 futures fell 0.15%. Nasdaq 100 futures sank 0.3%. Apple stock weighed on all the major indexes, with Facebook and TSLA stock hitting the S&P 500 and Nasdaq.

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 101.43 million. Covid-19 deaths topped 2.18 million.

Coronavirus cases in the U.S. have hit 26.16 million, with deaths above 439,000.

Stock Market Rally

U.S. Stock Market Today Overview
Index Symbol Price Gain/Loss % Change
Dow Jones (0DJIA) 30302.97 -634.07 -2.05
S&P 500 (0S&P5) 3750.95 -98.67 -2.56
Nasdaq (0NDQC ) 13270.60 -355.47 -2.61
Russell 2000 (IWM) 209.53 -3.77 -1.77
IBD 50 (FFTY) 43.63 -1.84 -4.05
Last Update: 4:04 PM ET 1/27/2021

The stock market rally suffered another retreat, with the major indexes down significantly, finishing close to their lows

Stocks rebounded from morning lows but resumed selling following the Fed meeting announcement. There was only a slight tweak in the Fed statement implying that coronavirus risk is less of a concern in the medium term as Covid cases fall and vaccinations pick up. Fed chief Jerome Powell largely sidestepped questions about whether asset prices are in a bubble, saying his focus is on restoring full employment.

The Dow Jones Industrial Average lost 2.05% in Wednesday’s stock market trading, closing just above its 50-day moving average after briefly undercutting that key level. The S&P 500 index sank 2.6%, knifing through its 21-day exponential moving average and moving close to its 50-day. The Nasdaq composite also sank 2.6%, but stopped short of its 21-day.

While squeeze plays such as GME stock and AMC stock kept soaring, traditional leading stocks had a tougher time.

Dow Jones giant Microsoft (MSFT) and AMD (AMD) reported strong quarterly results and raised guidance late Tuesday. But Microsoft stock erased a solid gain to close up 0.25%, just below a buy point. AMD stock tumbled 6.2%.

Among the best ETFs, the Innovator IBD 50 ETF (FFTY) retreated 4%, while the Innovator IBD Breakout Opportunities ETF (BOUT) lost 4.2%. The iShares Expanded Tech-Software Sector ETF (IGV) retreated 2.3%, with Microsoft and ServiceNow stock major holdings. The VanEck Vectors Semiconductor ETF (SMH) skidded 4.9%, with AMD and LRCX stocks key components.

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

Apple Earnings

Apple earnings climbed 34% to $1.68 a share. Revenue rose 21% to 111.43 billion, on strong demand for iPhones, wearables and services. Wall Street had forecast Apple earnings per share of $1.41 on sales of $103.28 billion.

Apple once again declined to give guidance.

Apple stock sank 3% to 137.50 in extended trade. Shares dipped 0.6% to 142.06 in the regular session. Apple stock seems likely to test its 138.89 cup-with-handle buy point, according to MarketSmith analysis.

Tesla Earnings

Tesla earnings shot up 95% to 80 cents a share, weighed down by higher-than-expected stock compensation. Revenue grew 45% to $10.74 billion. Analysts expected Tesla earnings of 90 cents a share on sales of $10.13 billion, according to Zacks Investment Research. Many other estimates had Tesla earnings at just over $1 a share.

Regulatory credits revenue, which is expected to decline sharply, tripled to $401 million.

Gross margins excluding credits were 20.7%, far below views for 24.2%.

The average selling price for Tesla vehicles fell 11% vs. a year earlier amid price cuts. Tesla has continued to cut prices in Europe, while introducing a much-cheaper, shorter range Model Y in the U.S.

Tesla said it’s starting production of a newly revamped Model S and X this month with Model S Plaid deliveries starting in February. It also plans to launch its long-awaited Tesla Semi later this year. That suggests that the Tesla Cybertruck pickup will not launch in 2021. Elon Musk said on the conference call that Tesla would be lucky to make a few Cybertrucks by year-end.

Tesla touted continued big capacity growth, with the Berlin and Austin factories set to begin production sometime in 2021. It expects to grow deliveries 50% annually over time, but outpace that in 2021. That means more than 749,325 vehicles this year, vs. 499,500 in 2020.

But Tesla signaled Q1 will be weak. It blamed the Model S changeover, as well as a chip shortage that’s hitting much of the auto industry. Other data suggest weak U.S. orders to start 2021.

Tesla stock fell 5% overnight. Shares sank 2.1% to 864.16 on Wednesday. Arguably Tesla stock has been in a high-tight-flag pattern

Facebook Earnings

Facebook earnings jumped 52% to $3.88 a share, with revenue up 33% to $28.07 billion. Analysts expected Facebook earnings per share of $3.19 on revenue of $26.4 billion.

Facebook said it had 1.84 billion daily active users in Q4, and 2.8 billion monthly active users.

Facebook stock retreated 2%. FB stock dropped 3.5% to 272.14 on Wednesday, back to its 50-day line. Rebounding above Tuesday’s intraday high of 285.39 could offer a very early entry. The official buy point is 304.77.

ServiceNow Earnings

ServiceNow earnings rose 22% to $1.17 a share, with revenue up 31% to $1.25 billion. Analysts expected ServiceNow earnings of $1.05 on sales of $1.21 billion.

NOW stock rose almost 3% in extended trade. ServiceNow stock lost 3% to 516.50, to close below the 50-day line. A rebound above the 50-day line and last week’s high of 554.34 could offer an early entry. NOW stock is in a flat base with an official buy point of 566.84.

Lam Research Earnings

Lam Research earnings leapt 51% to $6.03 a share. Fiscal Q2 sales grew 34% to $3.46 billion. Wall Street predicted Lam Research earnings of $5.72 a share on $3.333 billion in revenue.

The chip-equipment giant guided higher for the current third quarter.

LRCX stock edged lower overnight. Lam Research stock tumbled 6.8% to 515.04 on Wednesday. LRCX stock retreated to the top of a prior short consolidation, closing just above the 10-week moving average.

GME Stock, AMC Stock

GME stock shot up 135% to 347.51. Melvin Capital and Citron Research said before Wednesday’s open that they closed their GME stock short positions, but the buying frenzy continued. GME stock is up 1,745% in 2021 so far.

AMC stock erupted for a 301% gain to 19.90. EXPR stock vaulted 214% and KOSS stock 480%.

Late Wednesday, the subreddit chat room Wallstreetbets, which has generated mass movements vs. short sellers in GME stock, AMC stock and more, briefly went private Wednesday evening.

Group-chat platform operator Discord banned r/WallStreetBets server. But Discord said it was over hate speech violations, not the GME short squeeze saga.

By 7:45 p.m. ET, the Wallstreetbets subreddit was open again, though the Gamestop forum was closed to new comments.

Overnight, GME stock lost 16% and KOSS stock 14%. AMC stock tumbled 27% and EXPR stock sank 24%.

The moves by GME stock, AMC stock and others are just incredible. A social media-driven short squeeze into a dying mall-based video game retailer and theater chain almost seems like a parody. The risks are extremely high trying to play these stocks — long or short.

Suffice to say that GME stock is not the type of name that CAN SLIM investors usually look at.

Stock Market Analysis

The stock market rally suffered its worst losses in weeks on the major indexes.

While short squeezes like GME stock and AMC stock kept defying gravity and just about everything else, leading stocks struggled once again. It’s possible that hot money is flooding into GME stock at the expense of traditional growth and leading stocks.

But whatever the reason, chips, software, genomics and cyclicals sold off. Many had losses of 5% or more. Some recent IPOs did well, such as Airbnb (ABNB) and Palantir (PLTR), but many others sold off or erased intraday gains.

Leading stocks under pressure is a bad sign for the stock market rally.

Thursday’s action could be another one-day pullback or the start of something more serious. The market reaction to the Apple, Tesla and Facebook earnings reports will be key.

If the Nasdaq rebounds quickly, how much upside would there be? The composite closed 4.8% above its 50-day line, down from 8.2% on Monday. That’s below the 6% level generally seen as extended, but it’s not far from being so.

The Nasdaq has had a few brief, relatively modest pullbacks in the past few weeks. Technically, that eases the pressure in the short run. But quick recoveries convince investors to become even more bullish and less fearful.

The CBOE Volatility Index did jump 38% on Wednesday to a two-month high.

What You Should Do Now

It may take a deeper, longer pullback or correction to drain the market of enthusiasm. That doesn’t have to happen for a while. But investors should be prepared for it.

The risk/reward ratio for being deep on margin is not nearly as strong as in the first several weeks of a new stock market rally. While you don’t need to be defensive, yet, investors should be more focused on preserving their big gains since April rather than trying to step on the gas. So have a game plan for your stocks. Which stocks do you really want to hold and which are expendable?

Also, an exit strategy doesn’t have to be a stampede. You might decide to sell one-third of XYZ stock if it does this, another third at this point, and closing out the position if this occurs.

One advantage of selling into strength or locking in partial gains is that it can give you the confidence to hold through shakeouts and pullbacks, and minimize your losses in a bigger market retreat.

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

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