Monday, June 5, 2017

Stock Futures: Apple Plays Catch-Up; Does The Nasdaq Need A Break?

June 5, 2017

Futures for the Dow Jones industrial average, S&P 500 index and Nasdaq 100 held near record levels early Monday. Apple (AAPL) reportedly is set to unveil a digital assistant device akin to the Amazon (AMZN) Echo and the Google Home from Alphabet (GOOGL).

On Friday, the Dow Jones industrial average, S&P 500 index and Nasdaq composite all hit all-time highs. Early Monday morning, S&P 500 futures fell nearly 0.1% vs. fair value Sunday evening. Dow industrials and Nasdaq 100 futures were fractionally lower.

Meanwhile, oil futures rose more than 1% overnight after Saudi Arabia, Bahrain, the United Arab Emirates and Egypt cut ties with Qatar over its relationship with Iran and support for the Muslim Brotherhood.

The Nasdaq composite is now 5% above its 50-day moving average. While that isn't a specific warning sign for investors, over the last several months the tech-heavy index has made short-term tops whenever it has risen that far above the 50-day.

The last time was on March 1. After that, the Nasdaq moved sideways for several weeks. That gave time for the 50-day line to catch up — the Nasdaq found support in mid-April — and for new stock consolidations to form.

Even with the sideways action, the Nasdaq has still risen for the last seven months and 10 of the last 11. A lot of the credit for that run comes from Apple and the FANG internet stocks Facebook (FB), Amazon, Netflix (NFLX) and Google parent Alphabet.

Apple begins its annual Worldwide Developers Conference on Monday. Apple is rumored to be working on a voice-activated digital device powered by its Siri personal assistant. While Apple was a leader with its introduction of Siri years ago, but over the years Amazon and Google have made big strides in hardware and software.

Apple is expected to unveil iOS 11, its latest operating system ahead of its 10th generation smartphone expected later this year. I also could refresh its Mac computers and introduce a new Apple TV set-top box.

Apple shares have been consolidating for the past three weeks near record highs. That's too short to be actionable. The stock is well extended from buy points or follow-on entries.

As for the FANG stocks, Facebook has been consolidating for more than four weeks. If it gets to five weeks, it would have a proper flat base. But shares closed Friday right at all-time levels.

Amazon, Netflix and Alphabet all hit record highs last week, with Amazon closing above 1,000 for the first time.

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