The U.S. is still on track to re-open despite hitting its 1 millionth COVID-19 patient earlier today. To investors this morning, that was reason enough to keep buying.
The major indexes all soared to start the trading session.
Then, by noon, stocks were trading flat.
By the close, the Dow, S&P, and Nasdaq Composite dropped 0.1%, 0.5%, and 1.4%, respectively, as big tech got slammed.
With earnings approaching, tech investors ran for the hills. Facebook (NASDAQ: FB), Amazon (NASDAQ: AMZN), Netflix (NASDAQ: NFLX), and Apple (NASDAQ: AAPL) all saw moderate losses.
“I think people are selling into the tech earnings,” Peter Cardillo, chief market economist at Spartan Capital Securities, said.
“If those results disappoint, then those stocks can lead the market lower. But in general, the market has been resilient lately.”
Alphabet (NASDAQ: GOOG), which reported surprisingly strong revenues shortly after the market closed, dropped 3% during trading.
If the rest of the tech sector follows suit, a tech rally continuation could be on its way even though business slowed in March.
“Performance was strong during the first two months of the quarter, but then in March we experienced a significant slowdown in ad revenues,” said Alphabet CFO Ruth Porat.
“We are sharpening our focus on executing more efficiently while continuing to invest in our long-term opportunities.”
Moving forward, some analysts believe the market-wide rally will continue despite today’s hiccup. A slow re-opening of the U.S. economy should send stocks higher, regardless of last quarter’s earnings.
“The stock market is increasingly reflecting a restart in the economy as more and more states show a willingness to allow some economic activities to come back online,” said Jim Paulsen, chief investment strategist at The Leuthold Group.
“Not only did the S&P 500 index post a healthy gain [Monday], but it was led by those segments of the marketplace which are most dependent on an economic restart including small caps, high beta stocks, and cyclical sectors like financials, materials, and industrials.”
One industry in particular – department stores – stands to benefit greatly as physical business locations are allowed to serve customers. One stock from that industry, Kohl’s (NYSE: KSS), could be approaching a major rally as a result.
In the daily candlestick chart above, you can see that KSS has been swinging every which way since bottoming in early April – something the rest of the market did in late March.
Now, however, after setting a higher low last week, KSS is rising. Today the stock broke out above its minor bearish trend (represented with the yellow trendline).
Should KSS trade above today’s high, it might make sense to go long on the stock with a trade trigger of $21.05.
Past that, KSS would surpass a level of key resistance (the April high). If the test re-openings in the U.S. go well, expect KSS to leave that resistance in the dust as it partakes in a major May rally.
