Dow Jones Futures Signal New Stock Market Correction Lows

Dow Jones futures fell late Tuesday, along with S&P 500 futures and Nasdaq futures, suggesting the major averages may test or undercut current stock market correction lows. That’s after stocks again closed near session lows. Workday earnings topped views after hours with guidance also strong. But Workday stock reversed lower late. Meanwhile, new IPO Soliton (SOLY) kept running late after more than doubling during Tuesday’s stock market session on a big FDA approval. Defense contractor Heico (HEI) spiked late on earnings.

IBD 50 stock Workday (WDAY) has a best-possible IBD Composite Rating of 99. Heico stock has a 98 Composite Rating. Soliton stock, which came public in February and has no revenue to speak of, has a 40 CR.

A Workday stock decline could be a bad sign for the software sector, which has held up well even as the stock market correction grinds lower. Late last week Autodesk (ADSKWealth Strength IndexAAPL is Extremely Up and trending Up) and Splunk (SPLK), two other top software stocks, sold off after earnings. In fact, Workday, Autodesk and Splunk stocks all sold off on March 1 after the software trio’s prior earnings report.

Dow Jones Futures Today

Dow Jones futures fell 0.2% vs. fair value. S&P 500 futures lost 0.3%. Nasdaq 100 futures sank 0.5%. Asian markets traded lower as sovereign bond yields continued to sink, with the Aussie yield curve inverting.

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

Current Stock Market Correction

For a second straight session, the major stock market indexes opened with solid gains but closed near intraday lows, a hallmark of stock market corrections. On Tuesday, the indexes closed lower, with the Nasdaq falling 0.4%, the S&P 500 index 0.8% and the Dow Jones 0.9%.

The Dow Jones closed below its 200-day moving average for the first time since May 13. The S&P 500 index and Nasdaq composite didn’t undercut recent intraday lows, but did set their lowest closes of the current stock market correction.

Stock futures suggest that the Dow Jones, Nasdaq composite and especially the S&P 500 index could open below their recent lows, ending their tepid stock market rally attempts.

China trade war concerns continue to weigh on the current stock market and pushing sovereign bond yields lower. President Donald Trump said Monday he is “not ready” for a China trade deal while Beijing signals it’s in no hurry for new trade talks.

Among the best ETFs, the Innovator IBD 50 ETF (FFTY) dipped 0.1%, but still outperformed the S&P 500 and other major averages. The iShares Expanded Tech-Software Sector ETF (IGV) actually rose 0.2%. The VanEck Vectors Semiconductor ETF (SMH) slid 0.9%, as chip stocks continued to slide.

Workday Earnings

Workday earnings rose to 43 cents a share in fiscal Q1 with revenue up 33% to $825.1 million. Analysts expected Workday earnings of 41 cents a share, with revenue at $813.9 million.

Workday also raised guidance for Q2 and full-year subscription revenue growth.

Workday stock initially rose more than 2% late Tuesday, then reversed to trade 0.5% lower. Shares rose 1% to 212.87 Tuesday, hitting a record 217.63 intraday. Workday stock is extended from a 200.10 flat base as part of a base-on-base pattern.

The relative strength line, which tracks a stock’s performance vs. the S&P 500 index, is at a record high. The RS line is the blue line in the charts below.

It’s a big week for software earnings, with Veeva Systems (VEEV) and Palo Alto Networks(PANW) on Wednesday; with Zscaler (ZS) and Okta (OKTA) on Thursday.

If software earnings impress overall, it would be a positive sign. But weak results or guidance could sink the last big tech sector holding up in the stock market correction.

Soliton Stock

Soliton stock vaulted 38% to 19.68 in heavy trade after hours after spiking more than 50% at one point. That was after erupting 148% to 14.22 Tuesday. The FDA gave 501(k) approval to its RAP tattoo removal device. The device lets people remove tattoos with as few as two or three laser treatments vs. 10 or more with current technology.

Soliton stock came public at 5 a share in February, cleared an IPO base in March and ran up to 15 on April 16. But shares pulled back, tumbling all the way to 5.02 on May 23. Soliton stock is set to break out of an extremely deep base, even for an IPO, though FDA approval for a zero-revenue company definitely signals a game-changer.

Heico Earnings

Heico earnings rose 54% to 60 cents a share as revenue climbed 20% to $515.6 million. Analysts expected Heico earnings of 49 cents on sales of $478 million.

The aerospace/defense contractor’s top- and bottom-line growth accelerated for a second straight quarter.

Heico stock shot up 8% to 113.15 overnight. That signals a move above its May 6 peak of 107.45 from a consolidation that’s too short to be a proper base. The A class shares of Heico (HEIA) were not active late, but have been finding support at their 50-day line.

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Have a great day, hope this helps!