Dow Jones futures fell slightly overnight, along with S&P 500 futures and Nasdaq futures. The market upturn showed strength on Thursday, with China’s stimulus hopes giving a big boost to equities, commodities and government interest rates. But the major indices run into an important area of resistance with the job report in June in print before Friday’s opening.
Chinese e-commerce giant Ali Baba (BABA), head of genre editing Crispr Therapeutics (CRSP), coal miner Alliance Resource Partners (ARLP), utility infrastructure company Quanta services (PWR) and solar energy games Enphase Energy (ENPH) flashed with buy signals on Thursday.
BABA shares cleared key levels following reports of new stimulus from China. The CRSP stock has a similar chart as Alibabas. The ARLP stock recovered from the 50-day line and managed short-term levels. PWR shares and Enphase Energy triggered early entries within messy handles.
The GME stock retreated 6% overnight when the mall-based video game retailer fired CFO Mike Recupero and made significant layoffs across the company. Late Wednesday, GameStop (GME) announced plans for a 4-to-1 share split. GME shares rose 15% on Thursday.
The TWTR share fell 4% overnight to just over 37 on reports that Tesla boss Elon Musk’s Twitter deal is in “serious danger”. Twitter (TWTR) reiterated on Thursday that it stands by the estimate that 5% of the accounts are robots, but Musk is apparently not satisfied. He is also reportedly struggling to raise $ 44 billion in financing for the deal, $ 54.20 per share. Musk may want to leave the deal or pay a much lower price, but he has few legal options, according to experts.
Upstart (UPST) reported preliminary revenue in the second quarter of $ 228 million against the target of $ 295 million to $ 305 million. The shares plunged 17% in expanded trading. The UPST share crashed 56% on May 10 on the previous forecast.
Tesla sales, EV shares
Early Friday, investors will get Tesla China sales for June, although the EV giant has already reported global deliveries in the second quarter. Earlier this week, the China Passenger Car Association reported that Tesla delivered 78,000 Chinese-made cars in June, according to preliminary figures. In the meantime, further signs that China will extend subsidies for electric cars will come in handy Tesla (TSLA) and Chinese electric car manufacturers.
The Tesla stock jumped 5.5% to 733.63 on Thursday, and crossed the 21-day line. This despite another NHTSA investigation into a fatal accident that possibly involved the Tesla Autopilot. It is also after a report that Musk became the father of twins last year with a high-level leader.
EV and battery giant BYD (BYDDF) jumped 4.6% to 42.40, a new final high, moving out of the buying area. Li Auto (LI) increased 1.8% to 39.26%, near the top of a buying zone.
The PWR stock is on the IBD Leaderboard. The Enphase Energy stock is at IBD 50. Quanta Services and the ENPH stock are at IBD Big Cap 20. Quanta Services was Thursday’s IBD Stock Of The Day.
The video built into this article discussed Thursday’s marketing action and analyzed AMD (AMD), Baidu (BIDU) and ARLP shares.
The Ministry of Labor will release the job report for June at 08:30 ET. Economists expect to see non-farm wages increase by 270,000 compared to May’s increase of 390,000 jobs.
Unemployment is expected to remain at 3.6 per cent. A lower unemployment rate would worry the Federal Reserve, which wants to see the labor markets eased.
The job report, together with next week’s consumer price index for June next week, will be the key to the outlook for the Fed rate hike. But the Fed appears to be locked in another 75 basis point move by the end of July. There will be two more KPI and job reports before the September meeting.
Dow Jones Futures today
Dow Jones futures fell 0.2% to fair value. S&P 500 futures lost 0.3%. Nasdaq 100 futures retreated 0.4%.
The 10-year government interest rate fell 3 basis points to 2.98%. The 2-year return fell 4 basis points to 3%.
Crude oil prices fell. Copper prices fell 2%.
The job report in June will certainly swing Dow Jones futures before the opening.
Keep in mind that overnight trading in Dow futures and elsewhere does not necessarily translate into actual trading in the next regular trading session.
Join IBD experts as they analyze stocks that can be traded in the stock market rally on IBD Live
Stock market rally
The stock price rise started higher and increased rapidly, ending close to session highs with broad-based gains.
China could allow provincial governments to issue bonds worth up to $ 220 billion in infrastructure spending, Bloomberg reported, strengthening global economic hopes.
The Dow Jones Industrial Average rose 1.1% in Thursday’s trading session. The S&P 500 index rose 1.5 percent. The Nasdaq index rose 2.3 percent. Small-cap Russell 2000 rose 2.35%.
The US crude oil price rose 4.3% to $ 102.73 a barrel, back above the $ 100 level. Gasoline futures jumped 5.6% and natural gas futures jumped 14%.
Copper futures rose more than 4%, driven by China’s stimulus hopes.
The 10-year government bond jumped 10 basis points to 3.01%. The two-year government interest rate rose 8 basis points to 3.04%, and still signals a slight inversion.
Among the best ETFs, the Innovator IBD 50 ETF (FFTY) rose 1.5%, while the Innovator IBD Breakout Opportunities ETF (BOUT) rose 0.2%. iShares Expanded Tech-Software Sector ETF (IGV) rose 1.9%. VanEck Vectors Semiconductor ETF (SMH) rose 4.6%.
The SPDR S&P Metals & Mining ETF (XME) rose 5.2% and the Global X US Infrastructure Development ETF (PAVE) rose 2.3%. The US Global Jets ETF (JETS) rose 1.3%. SPDR S&P Homebuilders ETF (XHB) increased 1.5%. Energy Select SPDR ETF (XLE) jumped 3.6% and Financial Select SPDR ETF (XLF) rose 1.45%. Health Care Select Sector SPDR Fund (XLV) rose 0.4%.
ARK Innovation ETF (ARKK) reflects more speculative history stocks, jumped 6.5% and ARK Genomics ETF (ARKG) 6.4%. The Tesla stock is a large holding across Ark Invest’s ETFs. The CRSP stock is a remarkable ARKG stock. Cathie Wood’s Ark also owns some BYD shares.
Five best Chinese stocks to see now
Stocks flashing buy signals
The BABA stock rose 2.75% to 122.39, moving above the 200-day moving average. It also manages without a doubt a bottom base, with resistance just over 121 in the last month. Alibaba shares bottomed out in March, along with many other Chinese names, but almost the entire bottom base formed during the 200-day period. However, the relative strength of the BABA stock is at its highest level since November.
Pinduoduo (PDD) and Baidu have traded over their 200-day lines recently.
The CRSP stock jumped 7.6% to 78.20, above the 200-day line and managed the resistance from the last few weeks. But unlike Alibaba, the Crispr stock does not have a bottom base, even though it did not undergo its low May. Crispr and Vertex Pharmaceuticals (VRTX) is testing a genetically modified drug that can offer a functional cure for two blood diseases, sickle cell disease and beta-thalassemia.
Alliance Resource Partners shares rose 5.6% to 19.41 and rebounded above their 50-day line, breaking a downward trend line and removing short-term resistance at 19.35. All of these give reasons to take an early entry in this coal stock. The ARLP share is consolidating, but needs more time to build a new base after strong gains in large parts of 2022.
The ENPH share jumped 6.1% to 206.84. Enphase has a buying point of 217.33 handles on a double bottom base. On Thursday, the ENPH stock broke a downward trend in the handle and topped a short-term level of 210.10 intraday. Investors wishing to enter the Enphase share may at least start a position at an early entry, given the large daily fluctuations of the solar energy game.
The Quanta stock rose 4.7% to 132.25, working towards a buy point of 138.56 from a somewhat difficult cup-with-handle base. Within the deep handle, the PWR stock broke a trend line and managed last week’s highest of 129.86. But the volume was low on Thursday, while the Quanta share is 9.9% above the 50-day line.
Market Rally Analysis
The rise in equities continues to regain strength, with a solid to strong rise for the major indices. The volume fell in relation to Wednesday’s session, however.
In contrast to Wednesday, when losing shares easily surpassed the winners, the market breadth was strong.
Medicines are still the leading sector, although there are some tentative signs of broader strength.
The market upturn is still under pressure, although conditions are less serious than at the end of last week.
The S&P 500, Dow Jones and Russell 2000 regained their 21-day moving averages. Nasdaq, which just topped its 21-day line on Wednesday, ran up to just below the 50-day line and peaks at the end of June.
Especially the composite just above its 10-week moving average. That was where the Nasdaq resisted last week, triggering strong sales. Nasdaq met resistance at its 10-week line in early June and late April.
The 10-week line has been a resistance area for many individual stocks, but megacaps such as apple (AAPL) and Google parent Alphabet (GOOGL) pushes itself far beyond that. The TSLA stock is now slightly above its 10-week line after reversing lower from that key level last week.
Although the major indices convincingly clear their 10-week lines, they will almost immediately face resistance at the peaks in early June.
Friday’s job report could be a major market catalyst, up or down. Given this week’s market gains, especially for Nasdaq, to major opposition, a retirement after work would not be a surprise.
Copper, crude oil and other commodities roared back on Thursday, while government interest rates picked up again. But there is a dilemma. If government interest rates continue to rise, will it weigh on equities, especially growth? If commodities return to highs, it could revive inflation concerns and stimulate more aggressive interest rate hikes in the Fed.
Time market with IBD’s ETF market strategy
What to do now
With the market upturn stabilizing somewhat, investors may add a little more exposure, perhaps expanding temporarily from the medical sector. But the trend is still under pressure, and the indices come straight to levels that have served as strong resistance most of the year.
Shares that are rising now, especially high-octane names like Crispr, could sell quickly if the market turns.
If the major indices clear their 10-week and 50-day lines, investors may gradually reduce their cash position. But the market upturn will continue to face more levels of resistance in rapid succession.
Following the job report and next week’s CPI data, the earnings season will begin to pick up speed. With the economy changing, business guidance will be key and can have a major impact on individual stocks, sectors and the overall market.
Read The Big Picture every day to stay in sync with the market direction and leading stocks and sectors.
Follow Ed Carson on Twitter at @IBD_ECarson for stock market updates and more.
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