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Dow Jones Futures Rise: Palantir Flashes Buy Signal in Catch-22 Market; Micron Earnings Peak




Dow Jones futures rose slightly after hours, along with S&P 500 futures and Nasdaq futures. Micron technology (MU) reported earnings late.




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The stock market recovery had a narrowly mixed Wednesday after Tuesday’s bullish recovery. The Nasdaq composite rose slightly, but pared gains during the day.

A number of software stocks flashed buy signals, including HubSpot (HUBS), MongoDB (MDB), Data dog (DDOG), Snowflake (SNOW), Palantir Technologies (PLTR), Dynatrace (DT), Confluent (CFLT), Samsara (IOT), Monday.com (MNDY) and Shopify (SHOP). But several closed well off session highs.

Nvidia (NVDA) and Advanced Micro Devices ( AMD ) showed some resilience after a report that the Biden administration was mulling tighter chip export curbs to China.

The market upswing can end up in a Catch-22 situation, which increases the risk of new purchases in the short term. So investors should be careful in making and handling new purchases.

Micron revenue

Micron reported a third-quarter financial loss and revenue decline that was slightly better than expected. The memory chip giant guided analysts to a bigger loss in the fourth quarter, but in line with revenue. It cited recent China restrictions on Micron chips as a “significant headwind affecting our outlook and slowing our recovery.”

MU shares rose modestly in late trading. Shares rose 0.4% to 67.07 on Wednesday, rebounding from around the 50-day line.

Worthington Industries (WOR) earnings beat slightly while earnings fell short. WOR stock rose solidly overnight, signaling a breakout. Worthington shares rose 1.4% to 63.37 on Wednesday, trading right at the 63.37 cup-with-handle buy point.

MongoDB, Nvidia, Shopify, Dynatrace and HUBS stocks are on the IBD Leaderboard. CFLT shares and Dynatrace are on SwingTrader. MongoDB, HubSpot, Dynatrace, Monday.com, Datadog and IOT stocks are on the IBD 50. Datadog and MDB stocks are on the IBD Big Cap 20. HubSpot was Wednesday’s IBD Stock Of The Day.

The bank’s stress tests

As expected, the Federal Reserve said late Wednesday that all 23 major treasuries passed annual stress tests, with capital levels sufficient for a hypothetical severe recession. It comes after a banking crisis earlier this spring, but which was concentrated in regional banks. Still, shares of JPMorgan Chase (JPM), Bank of America (BAC) and most of the other major banks rose slightly overnight.

Dow Jones Futures today

Dow Jones futures were 0.2% above fair value. S&P 500 futures rose 0.2%. Nasdaq 100 futures rose 0.3 percent.

Keep in mind that overnight action in Dow futures and elsewhere does not necessarily translate into actual trading in the next regular session.


Join IBD experts as they analyze actionable stocks in the stock market rally on IBD Live


Stock market rally

The stock market rally had a mixed session. The Dow Jones Industrial Average fell 0.2 percent in Wednesday’s trading. The S&P 500 lost a fraction. The Nasdaq composite rose 0.3 percent. The small-cap Russell 2000 gained 0.5

US crude oil prices rose 2.75% to $69.56 a barrel. Copper futures fell 1.6%, with a 4.9% plunge in a five-session losing streak.

The 10-year government yield fell 6 basis points to 3.71%.

ETFs

Among growth ETFs, the Innovator IBD 50 ETF ( FFTY ) gained 1.9% to its highest in nearly seven months.

The iShares Expanded Tech-Software Sector ETF ( IGV ) rose 0.5%, with shares of PLTR, HubSpot, Datadog, Dynatrace and Confluent all in the IGV.

VanEck Vectors Semiconductor ETF ( SMH ) fell 0.9%. Nvidia stock, Micron and AMD are major SMH holdings.

ARK Innovation ETF ( ARKK ), reflecting more speculative history stocks, rose 2% and ARK Genomics ETF ( ARKG ) rose 2.9%. The SHOP share is a top-10 ARK holding.

The SPDR S&P Metals & Mining ETF ( XME ) fell 0.3%. The US Global Jets ETF (JETS) rose 0.8%. The SPDR S&P Homebuilders ETF (XHB) fell 0.4 percent. The Energy Select SPDR ETF (XLE) retreated 1% and the Health Care Select Sector SPDR Fund (XLV) fell 0.3%.

The Industrial Select Sector SPDR Fund (XLI) closed flat.

The Financial Select SPDR ETF (XLF) was down 0.2 percent. The SPDR S&P Regional Banking ETF (KRE) fell 0.5%,


Top five Chinese stocks to watch now


Shares in buying zones

HUBS shares rose 1.7% to 524.68, bouncing off the 21-day line, breaking a brief downtrend and breaking through the bulk of a four-week tight pattern. Investors could have used the June 23 high of 522.20 as an early entry. The official tight buy point is 535.12.

MDB shares fell 2.5% to a 52-week closing high of 398.02 on heavy volume. But shares pulled back from an intraday high of 414.48 and settled below a 398.89 buy point from a three-week tight or high-tight flag. MongoDB had already flashed an early entry in the past few days.

DDOG stock rose 2.6% to 98.15, breaking the downtrend into a handle in a deep cup base. The official buy point is 103.80, but this early entry may be the safer bet.

SNOW shares rose 3.9% to 183.86 on strong volume, but recovered well from intraday highs of 191.94. Snowflake stock is actionable from breaking the downtrend to a new handle in a long consolidation, but failed to close above an earlier buy point of 185.

PLTR stock jumped 4.6% to 15.28, rising from its 21-day line after regaining that level on Tuesday. But both gains came on below-average volume for Palantir.

DT shares rose 1.4% to 51.20, retreating from the 21-day line during a three-week tight forged just above a buy zone. But the shares closed in the bottom half of the range.

CFLT shares jumped 5.4% to 35.54, with a 21-day range after consolidating for a few weeks, modestly above an earlier base.

IOT shares fell 5% to 27.03, regaining the 21 days and breaking a brief downtrend. It hit resistance on the 10-day.

MNDY shares rose 2.7% to 172.72, back above a 171.89 buy point, according to MarketSmith analysis. It is already on its way to breaking a short downtrend.

SHOP stock ended 1.3% higher at 64.62, bouncing off the 21-day line and breaking a brief downtrend. Volume was low and shares supported an intraday move back above a buy point at 65.54. Shopify stock has consolidated after an earnings gap up in early May.

Nvidia shares

The Biden administration is considering new restrictions on the export of artificial intelligence chips, The Wall Street Journal reported Tuesday evening.

The Commerce Department can stop AI chip shipments from Nvidia and others to China and other countries of concern without first obtaining a license. Late last year, the US imposed significant export bans on China, but Nvidia adapted some of the affected chips to circumvent the restrictions. These chips can now be targeted.

Nvidia shares fell 1.8% to 411.17, near the middle of the range and above the 21-day line. It was an off day until Tuesday, which was an off day until Monday. A move above Tuesday’s 419.40 would break a short downtrend while still not being extended from the 21 days, providing a chance to add some shares or perhaps start a small position. The 10-day line would be another possible possibility.

AMD shares fell 0.2% to 110.19, bouncing off the 10-week line intraday after heavy losses over the past couple of weeks.


Stock market forecast for the next six months


Market rally analysis

The Nasdaq continued Tuesday’s pullback from its 21-day moving average, although it closed off intraday highs. It is trying to break the downtrend of the recent pullback.

The S&P 500 and Dow Jones, which broke the downtrends on Tuesday, fell slightly.

The Russell 2000 opened lower but then improved for modest gains, though it hit resistance at the 10-day line

The Invesco S&P 500 Equal Weight ETF ( RSP ) fell 0.2% and the First Trust Nasdaq 100 Equal Weighted Index ETF ( QQEW ) climbed 0.2%, after both broke downtrends on Tuesday when they bounced off 21-day lines. Both are significantly better than RSP and QQQ so far this week.

The market breadth was slightly positive, with gainers beating declines.

Leading stocks had a strong session. Software had a number of buy signals, even beyond Palantir, Snowflake, MongoDB, Shopify and the names cited here.

Nvidia shares and other chip plays showed resilience.

Chipotle Mexican Grill (CMG), Extreme networks (EXTR), TransMedics (TMDX), Trade Desk (TTD), Carpentry technology (CRS) and Super micro (SMCI) cleared various points of purchase.

Leading stocks appear eager to move higher with even modest gains in the major indexes, but how much room do they have?

At least for the moment, the market rally — and leading stocks — are in a Catch-22 situation. If the recent decline recovers, it will threaten the bullish stock moves of the past few days. However, if the market trends higher, the chances of another impending pullback will quickly rise. It also wouldn’t be good for new purchases.

The Nasdaq is now 6.6% above its 50-day moving average. The Nasdaq 100 is up 7.5% over the 50-day, after briefly topping 8% intraday. It wouldn’t take much for them to return to extreme levels of 10% or more.


Time the market with IBD’s ETF market strategy


What to do now

A number of stocks are flashing buy signals, giving investors opportunities to add some exposure.

The market rally is trying to reassert itself. But if the Nasdaq quickly gets significantly extended, another pullback could be coming soon. So it could be a short-term ceiling for the market.

Such back-and-forth action is not likely to be a real concern for existing positions with large gains, but can be difficult for new purchases. Investors may want to take quick partial profits.

It is important to run the monitors and keep the watchlists up to date. Have a broad list of strong stocks from across leading sectors, while paying extra attention to a smaller number of actionable or near-actionable stocks in which you are most interested.

Having these lists and using alerts can help you jump on leading stocks near listings. That could help limit the risk of a reversal from highs, as Wednesday’s action showed.

Read The Big Picture every day to stay in sync with market direction and leading stocks and sectors.

Follow Ed Carson on Twitter at @IBD_ECarson for stock exchange updates and more.

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