Dow Jones Futures falls after major market rally; Here’s what to do now
Dow Jones futures fell slightly overnight, along with S&P 500 futures and Nasdaq futures. The rise in shares had a strong Thursday, driven by positive reactions to earnings.
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Dollar tree (DLTR), Williams-Sonoma (WSM) and Macy’s (M) had strong results and at least solid guidance. Even more encouraging? Burlington stores (BURL) and Nvidia (NVDA) rose despite weak forecasts. This suggests that markets are pricing in bad news from cost pressures, supply chain problems and faltering consumers.
Lithium plays Albemarle (ALB) and Livent (LTHM) burst through resistance areas, flashing buy signals. Delta Air Lines (DAL) gathered over an aggressive entrance while Ashland Global Holdings (ASH) and WR Berkley (WRB) moved above early buy points.
Key income
Costco Wholesale (COST), Ulta beauty (ULTA) and Zscaler (ZS) reported after closing.
Costco revenues were in line, while sales just exceeded estimates for the third quarter. Shares fell 2% after falling 5.65% in Thursday’s ordinary session.
Ulta Beauty revenues hit easy, with revenues up 21%. The ULTA stock jumped 7% overnight, signaling a gap over the 200-day and 50-day lines. The shares already rose by 7.1% at Thursday’s session.
Zscaler revenues hit modestly, and the cybersecurity firm also provided positive guidance. ZS shares rose 1% in extended trading. The stock jumped 7.2% on Thursday, but is still close to the 18-month low.
The ALB stock is on the IBD Leaderboard. The ASH stock was Thursday’s IBD stock of the day. The WRB stock was Tuesday’s Stock Of The Day.
The video embedded in this article discussed an important marketing day and analyzed Ashland Global, Cabot (CBT) and DLTR stock.
Dow Jones Futures today
Dow Jones futures fell 0.1% to fair value. S&P 500 futures fell 0.1% and Nasdaq 100 futures fell 0.2%.
The Ministry of Trade will publish the report on income and consumption in April at 8:30 ET, and provides a broad view of the health of consumption expenditure. The report’s inflation meter is the Fed’s favorite.
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 powerful stocks in the stock market rally on IBD Live
Stock market rally
The rise in equities picked up quickly on Thursday, with strong progress for the major indices.
The Dow Jones Industrial Average rose 1.6% in Thursday’s trading session. The S&P 500 index rose 2 percent. The Nasdaq composite rose 2.7 percent. Small-cap Russell 2000 received 2.2%
Several stocks, including Nvidia and Burlington Stores, rose on Thursday despite weak guiding. This is a welcome change from the last few months when shares were sold on seemingly good news. This indicates that the market has priced in bad news and bearish fears and is ready to rally.
Of course, it is never clear what is priced in. Space (GPS) and Workday (WDAY) skid overnight on poor results.
The US crude oil price rose 3.4% to $ 114.09 a barrel.
The 10-year government interest rate rose 1 basis point to 2.76%.
ETFs
Among the best ETFs, the Innovator IBD 50 ETF (FFTY) rose 2.6%, while the Innovator IBD Breakout Opportunities ETF (BOUT) rose 1.85%. iShares Expanded Tech-Software Sector ETF (IGV) rose 2.1%. VanEck Vectors Semiconductor ETF (SMH) rose 3.3%, with the NVDA stock as a major item.
The SPDR S&P Metals & Mining ETF (XME) rose 1.3% and the Global X US Infrastructure Development ETF (PAVE) 2.2%. The US Global Jets ETF (JETS) rose 5.1%, with the DAL stock as a core item. SPDR S&P Homebuilders ETF (XHB) rose 3.9%. Energy Select SPDR ETF (XLE) rose 1.1% and Financial Select SPDR ETF (XLF) 2.3%. Health Care Select Sector SPDR Fund (XLV) rose 0.4%.
ARK Innovation ETF (ARKK) reflected more speculative history stocks, up 3.9% and ARK Genomics ETF (ARKG) 1.3%.
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Shares in buying zones
The Albemarle share jumped 7.4% to 255.05 in heavy volume, removing key resistance close to 248 months ago. It is a legitimate entry in a deep cup base with an official buy point of 291.58. Late Monday, Albemarle sharply increased its year-round income guidance for the second time in less than a month. The ALB stock briefly cleared the 248 area before retiring.
The relative strength line is at a new high, a bullish sign. The RS line, the blue line in the accompanying charts, tracks the performance of a stock versus the S&P 500 index.
The Livent share fell by 6.8% to 30.20, removing resistance just below 30, giving an early entry. The official purchase point for the cup is 33.14. At the beginning of May, the lithium producer shattered its view of income and raised guidance. The RS line for LTHM storage is at a new high.
Delta shares rose 5.8% to 40.83, moving above the 50-day and 200-day lines in addition to breaking a short trend line from the April 21 high of 46.27. DAL shares and other travel games picked up on Thursday, strengthened by increased income forecasts from Southwest Airlines (LUV) and JetBlue (JBLU).
The Delta population has met resistance at the 45-46 range several times in the last year. The consolidation since the end of April is on its way to being a proper base in a new week. One can look at this consolidation as a handle in a deep base back to March 2021.
Ashland shares rose 4% to 105.76, breaking a downward trend in a flat base and expanding a bounce from the 50-day line. The flat base, which can be seen as part of a consolidation back to November, has a buying point of 111.15. The RS line is the highest in almost three years.
The WRB share climbed 1.6% to 70.11, removing short-term resistance just above 69, which provided an early entry for the insurance company. The WR Berkley stock has a flat base with a buy point of 71.63, according to MarketSmith analysis. The RS line for WRB storage is at a high level.
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Market Rally Analysis
The stock market rally had a strong progress on Thursday, with significant gains on all the major indices.
In particular, Nasdaq volume rose slightly compared to Wednesday. NYSE volume fell modestly.
The Dow Jones and S&P 500 moved above their 21-day moving average, along with Russell 2000. Nasdaq is not quite there, but managed its 10-day line and moved above a short-term range.
After the 21-day line, the major indices meet resistance on the 50-day and 200-day lines. A power trend is still a long way off. The current market upswing may disappear long before then.
The market showed strong breadth on Thursday. With megacaps in no position to lead right now, a sustained market rally will need broad progress.
Traders had a strong session and were a big driver for Thursday’s market gains. But most are still badly damaged and need a lot of repair. The only exception is possibly the DLTR stock. Dollar Tree vaults 22%, back above its 50-day line and a trend line, and recovers all the losses that came from last week’s fantastic Goal (TGT) warning. However, the knitting chart for the last week is not normal.
Energy shares had a strong session with the sector, which is still the clear area of market power. Drug manufacturers look solid, while lithium games such as ALB stock are in play.
Travel games such as the DAL share are starting to look interesting, but have been exposed to turbulence. Some steel games go back.
While declining growth stocks were among Thursday’s big winners, they are still very risky. If the market retreats, they will be among the biggest losers.
Time market with IBD’s ETF market strategy
What to do now
Investors can tip into the market, either via individual stocks or a broad market ETF. While some single names flash with buy signals, many are in the energy range. But you do not want to be too exposed to any sector, not even energy.
If this market rally has legs, you can increase your exposure steadily as multiple names flash with buy signals. If there is another short-term progress, you will quickly go out.
Get your watch lists in shape. Look for stocks that are ready, or almost so. But also track quality names that are starting to set up.
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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