Dow Jones futures edged lower early Wednesday, along with S&P 500 futures and Nasdaq futures. The current stock market rally couldn't make headway Tuesday, as the major averages closed slightly lower. In late trading, recent China IPOs Nio (NIO) and Qutoutiao (QTT) reported big losses and booming revenue growth. Meanwhile, Ross Stores (ROST) gave weak guidance while cybersecurity software maker SailPoint Technologies (SAIL) topped views. Horizon Pharma (HZNP) disclosed a civil probe into possible drug kickbacks. Nio stock and Qutoutiao stock tumbled. Ross Stores stock and Horizon Pharma stock also fell, while SailPoint stock was up and down.
XWhy focus on these stocks? Ross Stores stock signaled a move below a buy point. Qutoutiao stock had cleared what was arguably a buy point, while Nio stock had been running up recently. Horizon Pharma is a drug leader, while drug rebates have become a big political issue. Finally, SailPoint stock is near a buy point, while its earnings follow negative reactions to reports from Salesforce.com (CRM) and several other software stocks in recent days.
Dow Jones Futures Today
Dow Jones futures fell 0.1% vs. fair value. S&P 500 futures retreated 0.1%. Nasdaq 100 futures lost nearly 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.
Current Stock Market Rally
The current stock market rally had a second straight down day, though the Dow Jones and Nasdaq composite lost less than 0.1%. The S&P 500 index fell 0.1%. Growth stocks, hammered in Monday's stock market, generally had modest losses or negligible gains. One of the best ETFs of the current stock market rally, the iShares Expanded Tech-Software ETF (IGV), dipped 0.4% after retreating 1.9% on Monday.
Bottom line, the major averages and leading stocks are telling a similar story: The current stock market rally is meeting resistance. After 10 weekly gains for the Nasdaq composite, that shouldn't be a surprise. This isn't a bad time to take some profits in top stocks, especially those that are in late-stage bases and may have limited upside. If they keep falling, you'll be glad you lightened your holdings. If they rise, that's OK. Sideways stock market action with a slight negative bias should allow different top stocks to form handles and other bullish entries.
Nio Stock
The Chinese electric-vehicle maker reported narrower fourth-quarter losses while sales more than doubled vs. Q3 on a big rise in SUV deliveries. But Nio warned that electric SUV sales were slowing more than expected in Q1 amid reduced EV subsidies and other factors.
Nio stock plunged 16% early Wednesday. Shares climbed 3.9% to 10.16 in Tuesday's stock market trading. Shares shot up 23% last week to their best level since Nio's September IPO. Nio stock is building the right side of a very deep base. Shares peaked at 13.80 on Sept. 14, the stock's third day of trading, then tumbled 59% to 5.61 on Oct. 30.
Qutoutiao Stock
Qutoutiao's revenue rose 426% to 1.327 billion yuan, or a 400% rise to $193.3 million. Average daily active users of the mobile news and entertainment content aggregation app shot up to 30.9 million, up 224% vs. a year earlier and 45% vs. the prior quarter. But the net loss exploded 683% to 398 million yuan ($57.9 million).
Qutoutiao stock dived 10.5% before the open. On Tuesday, Qutoutiao stock rose 14% to 15.65 in strong volume, hitting its best level since Sept. 17. Arguably, shares cleared a 14.58 cup-with-handle buy point. But the base is a jaw-dropping 80% deep. Bases that are 40% deep or more are less likely to succeed.
Qutoutiao stock, like Nio stock, also came public last September. The IPO priced at 7, then vaulted to 20.30 intraday in its Sept. 14 debut, then plunged to its Dec. 4 low of 4.
Ross Stores Stock
Ross Stores earnings were roughly in line, but the off-price apparel retailer's earnings guidance was at a discount. Despite a dividend hike and a $2.55 billion buyback plan, Ross Stores stock fell 2.8% to 91.50 before the open. That would push Ross Stores stock back below a 93.46 cup-with-handle buy point cleared in early February. Shares never made much progress since the breakout. Also, the relative strength line has been grinding lower for the past two months.
SailPoint Earnings
SailPoint earnings came in at 19 cents a share adjusted, beating views for a break-even Q4. Revenue rose 19% to $80.58 million, easily beating. SailPoint Technologies delayed its earnings report from late February, indicating at the time that it would top views.
SailPoint stock edged up 0.6% in late trading. Shares fell 1.4% to 29.62 on Tuesday. SailPoint stock is working on a 32.35 cup-with-handle entry. After post-earnings declines from Salesforce stock, Workday (WDAY), Splunk (SPLK) and Autodesk (ADSK), SailPoint Technologies offers an indication as to whether software stocks can rebound.
Horizon Pharma Stock
Horizon Pharma disclosed that the Justice Department is demanding documents related to claims that some payments to pharmacy benefit managers were potentially in violation of the Anti-Kickback Statute. Horizon Pharma said it would cooperate with the probe, arguing that its practices are legal.
Drugmakers' rebates to PBMs have come under fire, with the Trump administration recently proposing new guidelines that would limit the practice.
Horizon Pharma stock fell 3.6% early Wednesday. On Tuesday, shares slid 2.8%, their third straight decline. Horizon Pharma stock fell 2.8% but is still close to record highs after skyrocketing last week on earnings and upbeat drug news.
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