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Adam Montana

With Apple, FANGs KO'd, Tesla Stock Is Still Standing; Futures

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Dow Jones Futures: With Apple, FANGs KO'd, Tesla Stock Is Still Standing; Futures


Dow Jones futures rose modestly early Wednesday, along with S&P 500 futures and Nasdaq futures. A month ago the idea would have been laughable, but Tesla (TSLA) is the best-looking big tech stock right now. Tesla stock rose solidly Tuesday, working toward a buy point, above key support levels. Apple (AAPL) closed just below its 200-day moving average. Apple stock joined FANG stocks Facebook (FB), (AMZN), Netflix (NFLX) and Google parent Alphabet(GOOGL) below that key long-term support


Tesla Stock: Don't Laugh!


Tesla stock is holding above its 50-day moving average as it builds the right side of a base. That's something Apple stock, FANG stocks and most chips can only dream of right now. Two of Apple's Dow Jones peers, Microsoft(MSFT) and Cisco Systems (CSCO), aren't too far from potential buy points but have fallen below the 50-day. Other large-cap techs — such as Intel (INTC), Nvidia (NVDA), and Adobe (ADBE) — are generally in repair or disarray right now.

Dow Jones Futures Today

Dow Jones futures rose 0.4% vs. fair value. S&P 500 futures were 0.35% above fair value. Nasdaq 100 futures climbed 0.25%. Remember that action in Dow futures and elsewhere doesn't necessarily translate into actual trading in the next regular session.

In Tuesday's stock market, the Nasdaq composite tried to lead a rebound from Monday's broad sell-off. But with Apple stock falling 1% to undercut its 200-day line, the Nasdaq was lucky to close virtually flat, up 0.01 point. The Dow Jones and S&P 500 index, with energy stocks hit by a 7% plunge in crude futures, fell 0.4% and 0.15%, respectively.

The stock market rally is looking shaky, but it's not a rout. Some top stocks that have broken out recently have fallen back into their consolidations. But several others are acting well.

Apple Stock

Apple stock has now fallen 13.5% since its Nov. 1 earnings report. Analysts cite signs of weak Apple iPhone demand while several Apple suppliers issue warnings, including Skyworks (SWKS), Lumentum (LITE) and Qorvo (QRVO).

One silver lining: Apple suppliers generally did OK on Tuesday, after plunging for most of the month. In a not-unrelated move, the chip sector managed a modest gain. The Philadelphia Semiconductor Index closed off session highs and remains well below its 200-day line, but it's a sign that the Apple bad news has been priced into the iPhone ecosystem.

Apple stock were up 0.1% in the premarket.

Tesla Stock Technical Analysis

On Oct. 10, Tesla stock fell as low as 247.77. On Tuesday, shares rose 2.25% to 338.73 in stock market trading. Tesla stock is in a cup base with a potential buy point of 387.56. The base is deep but still acceptable. Tesla stock appears to be working on a handle, which would lower the entry by about 30 points. But that handle needs a couple more days to form.

Meanwhile, the relative strength line, which tracks a stock's performance vs. the S&P 500 index, has been trending higher over the past several weeks, albeit after a long stretch of underperformance.

A few smaller techs are performing well, notably Ciena. But Ciena (CIEN) has a $4.75 billion market cap. Tesla stock has a $58 billion valuation.

Tesla Stock Fundamentals

The third-quarter Tesla earnings report delivered a surprise: actual earnings, and a blowout number to boot. That raised hopes that Tesla has finally turned the corner on earnings and cash flow.

Keep in mind that one good quarter isn't enough. Tesla's EPS rank is a lowly 37. That's a prime reason why Tesla stock has a so-so 71 Composite Rating.

Tesla earnings must continue. And that's got to happen even as Tesla Model 3 average prices trend lower and the company faces more luxury electric-vehicle competition.

CEO Elon Musk has ceded his chairman post as part of an SEC settlement to put to rest the "funding secured" tweet debacle. Musk has to keep his focus on improving Tesla operations rather than obsessing about shorts on Twitter.

This is not a great time to making purchases, with the stock market rally under pressure. The fact that Tesla stock looks so appealing relative to other big techs is itself a commentary on the struggling market rally.

Tesla stock rose 0.5% in the premarket.

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