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Dow Jones Futures Rise: Beware The Megacap Rally; The AMAT share leads 5 key earnings




Dow Jones futures rose modestly Thursday night, along with S&P 500 futures and Nasdaq futures, with a vote in the House of Representatives on a huge reconciliation bill, as well as Materials used (AMAT) and Palo Alto Networks (PANW) earnings in focus.




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The stock market rise was mixed on Thursday, but it was a strong day for the technology giants. Nvidia (NVDA) increased earnings, and also lifted the rival Advanced micro devices (AMD) and provides tailwind for chip names. Amazon.com (AMZN) and Google parent Alphabet (GOOGL) flashed buy signals, joining Apple stock, which extended Wednesday’s breakout amid fresh Apple Car buzz.

With Apple, Amazon, Nvidia and other megacaps leading the way, the Nasdaq reached a record high of 100. It looks extended from the 50-day line again, which increases the risk of a new withdrawal. These technological titans also mask some weakness below the surface.

Meanwhile, several dealers flourished on earnings. Macy’s (M) shot up 21% to a three-year high. Kohls (KSS) jumped almost 11%, and broke out of a double bottom base handle. Bath & Body Works (BBWI) went up by 5%, and may offer an additional entry. Former sister company Victoria’s secret (VSCO) jumped 14%, broke a trend line and crossed its 50-day line.

EV shares lose cost

Rivian (RIVN) and Sure (LCID) sold out for a second consecutive session, down 15.5% and 10.5% respectively. At 123.38, the Rivian stock is still up 58% from its $ 78 listing price, but it is 31% lower than Tuesday’s high intraday. Lucid share is 18.5% discount on Wednesday’s high intraday.

Tesla shares rose 0.7% to 1,096.38. A report that apple (AAPL) accelerates car efforts, with a view to a 2025 launch of a fully autonomous electric car, helped push Tesla into the red card during the day. The TSLA stock is up 6.1% for the week.

Other EV shares, from startups such as Fisherman (FSR) to China plays like Xpeng (XPEV), withdrew significantly.

Key income

Applied Materials, Palo Alto Networks, Workday (WDAY), Williams-Sonoma (WSM) and Intuit (INTU) was key revenue late on Thursday.

The AMAT share fell 5% overnight, back towards the point of purchase, after Applied Materials missed EPS and sales. The chip equipment giant blamed supply chain problems.

WDAY shares and Williams-Sonoma fell sharply despite striking prospects, signaling movements back towards or below recent buying points.

The PANW stock, initially slightly down, rose modestly overnight after positive earnings and guiding. The shares signal a new high after finding support near the 50-day line. INTU shares rose on strong Intuit earnings.

IBD Watch List Shares

Tesla, Google, Nvidia and AMD are on the IBD Leaderboard. The Apple stock is on SwingTrader. Google stock is on IBD Long-Term Leaders. The Tesla stock, AMD, Nvidia and Williams-Sonoma are on IBD 50.

The video embedded in this article analyzed the market action as well as the Amazon stock, Kohls and ServiceNow (NOW).

Dow Jones Futures today

Dow Jones futures rose 0.3% relative to fair value. S&P 500 futures rose 0.4% and Nasdaq 100 futures rose 0.5%.

The House is set to pass a conciliation law Thursday night with $ 1.64 trillion in spending and $ 1.27 trillion in tax revenue, increasing its federal deficit by $ 367 billion over 10 years, according to CBO estimates. The bill includes a tax deduction for electric cars of $ 7,500, or $ 12,000 for union-created electric cars. However, the Senate is likely to make significant changes to the reconciliation package.

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 stock market had a mixed increase, with megacap technologies increasing.

The Dow Jones Industrial Average fell 0.2 percent in Thursday’s trading session. The S&P 500 index rose 0.3 percent. The Nasdaq composite rose 0.45%, with the Nasdaq 100 up 1%, driven by Apple shares, Amazon and Nvidia. Small-cap Russell 2000 fell 0.4%.

Nvidia shares fell 8.25% to 316.75, although it closed during the day. With a market value approaching $ 800 billion, the NVDA stock is definitely a Nasdaq driver.

Apple shares rose 2.85% to 157.87, reaching record highs and still within a 153.26 cup buying point with handles, according to MarketSmith analysis. The volume was strong after Wednesday’s trading above average. The relative strength line, although not on consolidation or record high, reached a short-term peak. The RS line, the blue line in the accompanying charts, tracks the performance of a stock versus the S&P 500 index.

Amazon shares fell 4.1% to 3,696.06, moving above a buying point of 3,605.55 in heavy volume. The RS line for AMZN shares has been moving upwards over the last couple of weeks, but has been lower since July 2020. Amazon shares have been limited over that time, with a number of failed outbreaks.

Google stock climbed 1.2% to 2,996.77, reaching a new high intraday. The stock is within range of 2,925.17 flat-base buying points, consolidated around this listing in recent weeks. In fact, the GOOGL stock has formed a three-week tight pattern, with an entry of 3,012.40. It can give investors a little more confidence by buying Google shares higher in the flat base buying zone.

ETFs

Among the best ETFs, the Innovator IBD 50 ETF (FFTY) climbed 0.8%, while the Innovator IBD Breakout Opportunities ETF (BOUT) rose 0.2%. iShares Expanded Tech-Software Sector ETF (IGV) fell 0.9%. VanEck Vectors Semiconductor ETF (SMH) jumped 2.5%, with Nvidia stock and AMD main components, along with AMAT.

The SPDR S&P Metals & Mining ETF (XME) was just over break-even and the Global X US Infrastructure Development ETF (PAVE) rose 0.2%. The US Global Jets ETF (JETS) fell 1.6 percent. SPDR S&P Homebuilders ETF (XHB) rose 0.3%. The WSM stock is a large XHB holding.

Energy Select SPDR ETF (XLE) fell 0.6%, but came from the lowest level as crude oil futures reversed higher. Financial Select SPDR ETF (XLF) fell 0.5%.

ARK Innovation ETF (ARKK) reflected more speculative history stocks, falling 2.5% and ARK Genomics ETF (ARKG) 3.4%, with ARKG at a low of 52 weeks. The Tesla share is still ARK Invest’s largest holding across its ETFs.


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Market Rally Analysis

The stock market rise is starting to get heavy again. The big Nasdaq 100, led by Apple, Google, Amazon, Nvidia and Tesla, reached a new high, up 1.8% this week. The Nasdaq composite and S&P 500, with more modest gains, are just below all-time high levels. The Dow is down slightly this week, while the Russell 2000 index is down 1.9%, both trading close to 21-day lines

Nasdaq is now 5.5% above its 50-day line, not quite at the 6% level that gives rise to concerns about a withdrawal. But the Nasdaq 100 is 6.7% during the 50 days.

If Apple, Google and Amazon march higher, join Microsoft (MSFT), it will be difficult to prevent the Nasdaq and especially the Nasdaq 100 from expanding significantly. This is true even if Nvidia and Tesla take a breather.

If that is the case, the market rally may not have much room to run before it meets resistance.

Meanwhile, many leaders are expanding. Some continue to drive, such as Nvidia, while others retire, such as Lucid stock. The electric car sector, which was overheated in the middle of the Rivian IPO, seems to be settling down again. The TSLA stock holds up better than most four-wheel rivals, even after last week’s sale.

Some stocks are going up in earnings, but gap-ups have been difficult.

Aside from megacap technologies and retail names, shipping stocks still look exciting. Housing-related shares are doing well.

But Apple et al. masks weakness. Losers led the winners by two-on-one on Nasdaq on Thursday. 264 Nasdaq shares reached a 52-week low against 116 new Nasdaq highs.


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What to do now

It may sound like a broken plate (what’s the record, Webby?), but investors can do much worse than let their positions work. Yes, the market upturn looks a little longer, so it’s not an ideal time to add a lot of exposure. But stocks are generally doing well, so investors do not need to cut exposure.

Consider taking partial gains in stocks when they are strongly extended from their 10-day or 50-day moving average. This is especially true with recent IPOs. The odds of a big withdrawal, even deleting all your winnings – see Dutch Bros (BROS) – are just too tall.

Investors should work on their watch lists, keep an eye on stocks that build handles and short consolidations. A few decent bases are out there, but the market upswing may need a few weeks of sideways action or withdrawal for more good layouts.

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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