Dow Jones futures fell overnight, along with S&P 500 futures and Nasdaq futures. DocuSign earnings and a Tesla charging agreement General engines (GM) were sharp overnight.
The stock market rally saw modest to solid gains across major indices on Thursday, with the Nasdaq recovering somewhat after Wednesday’s downturn. Meanwhile, small caps and mid caps fell slightly, bouncing off lows and giving up only some of their recent gains.
Dow Jones giant Boeing (BA), Cardinal Health (CAH), Floor & Decor (FND) and TG Therapeutics (TGTX) are in buying areas.
So also Taiwanese semiconductor manufacturing (TSM). Taiwan Semi is the world’s largest chip foundry and manufactures semiconductors Nvidia (NVDA), Apple (AAPL), Qualcomm (QCOM) and many others. Taiwan Semi reports May sales early Friday.
Tesla (TSLA) extended a record streak of high-volume up-days on Thursday. After the close came the news that General Motors will use Tesla’s Superchargers and charging technology. That follows a similar deal with Ford engine (F) announced at the end of May. TSLA stock and GM both rose in extended trading.
DocuSign (DOCU) reported its first-quarter fiscal results on Thursday. DOCU shares rose 5% in extended trading based on the earnings and guidance. The digital documents and e-signature software company is working to a buy point of 69.45 at the bottom and will regain its 200-day line at the end of May. DocuSign shares rose 2.2% to 58.48 on Thursday.
Tesla stock and Nvidia are on IBD Leaderboard. BA shares were added to SwingTrader on Thursday, joining FND shares. Floor & Decor was the IBD stock of the day on Thursday.
Dow Jones Futures Today
Dow Jones futures fell 0.15% from fair value. S&P 500 futures and Nasdaq 100 futures fell 0.1%. Tesla stock is a major S&P 500 and Nasdaq 100 member.
The yield on 10-year Treasury bills rose 2 basis points to 3.73%.
Late Thursday, former President Donald Trump said on his Truth Social site that he has been charged with federal criminal charges related to classified documents withheld after he left the White House. Multiple organizations confirmed Trump’s criminal charges, his second this year.
Remember that overnight action in Dow futures and elsewhere does not necessarily translate into actual trading in the next regular trading session.
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Stock market rally
The equity market rally gradually improved throughout Thursday, with indices closing close to their highs.
The Dow Jones Industrial Average rose 0.5% during Thursday trading. The S&P 500 index climbed 0.6%. The Nasdaq composite was up 1.0%. The small-cap Russell 2000 fell 0.4%.
US crude oil prices fell 1.7% to $71.29 a barrel.
The 10-year Treasury yield fell 7 basis points to 3.71%.
Among growth ETFs, the Innovator IBD 50 ETF (FFTY) was up 0.8%, while the Innovator IBD Breakout Opportunities ETF (BOUT) was up 0.5%. The iShares Expanded Tech-Software Sector ETF (IGV) rebounded 1.3%. The VanEck Vectors Semiconductor ETF (SMH) rose 1.2%. TSM stock is a huge SMH part along with Nvidia.
Reflecting more speculative story stocks, ARK Innovation ETF (ARKK) was up 1% and ARK Genomics ETF (ARKG) was down 0.1%. Tesla stock is the No. 1 position in Ark Invest’s ETFs.
SPDR S&P Metals & Mining ETF (XME) was down 0.2% and the Global X US Infrastructure Development ETF (PAVE) was slightly down 0.1%. US Global Jets ETF (JETS) rose 0.6%. SPDR S&P Homebuilders ETF (XHB) fell 0.35%, with FND stocks a notable XHB position. The Energy Select SPDR ETF (XLE) lost 0.4% and the Health Care Select Sector SPDR Fund (XLV) climbed 0.6%.
The Financial Select SPDR ETF (XLF) lost 0.1%. The SPDR S&P Regional Banking ETF (KRE) fell 1.2%.
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Stocks in buying areas
Shares of Boeing rose 2.9% to 218.11 on Thursday, trading above several short-term highs and a trendline, allowing early entry. The volume was robust. BA shares are approaching a buy point of 221.33 from a flat base going back nearly four months. That followed a strong move by the aviation giant of Dow from late September to mid-February.
CAH stock climbed 2.5% to 85.33, recovering from the 21-day, 10-week lines and breaking a brief downtrend in a minor consolidation just above a five-month base that was decisively erased in early May. Early Thursday, Cardinal Health slightly raised the midpoint of its 2023 earnings outlook and announced a $3.5 billion buyback of CAH shares.
TGTX shares bounced 7.3% to 28.98, exiting the 10-week line, retaking the 21-day mark and breaking a downtrend. Shares nearly doubled from a breakout in late March to early March before pulling back. TG Therapeutics is still losing money. Sales rose 286% in the last quarter, but only to $7.8 million. Investors can get an indication of monthly sales next week.
FND shares fell 1.2% to 96.55 in light volume on Thursday. But that followed a 5.1% jump in heavy trading Wednesday, reclaiming the 50-day line. The flooring seller is still susceptible to that. Floor & Decor stock also has a buy point of 101.49 cup with handle.
TSM shares fell 0.35% to 99.94, still above a consolidation buy point of 98.99, according to MarketSmith’s analysis. Taiwan Semi initially jumped into a buy zone on May 25 following Nvidia’s stellar earnings and guidance. On Monday, Taiwan Semi shares fell almost to the 21-day line before cutting losses. Taiwan Semiconductor will report May sales early Friday.
Meanwhile, Nvidia shares rose 2.8% to 385.10, continuing to trade within a range following the May 25 earnings gap. NVDA shares do not currently have a buying opportunity, although a tight pattern or pullback to, say, the 21-day line could provide opportunities to add shares.
Tesla shares rose 4.6% on Thursday to 234.86, the highest in seven months. The EV giant has now racked up 10 sessions, its longest win streak since 11 sessions in January 2021. But it’s a record nine consecutive gains in above-average volume. TSLA stock continues to expand from a buy point of 207.79.
Tesla-GM charging deal
In the Thursday night deal between Tesla and GM, General Motors will get access to 12,000 SuperChargers next year via an adapter. GM will also start using a charging port used by Tesla from 2025 models. The deal will boost Tesla’s sales, but also significantly increase charging options for GM and Ford as they ramp up EV production.
Tesla shares jumped 5% late.
GM shares rose 4% overnight, signaling that the price was back above the 200-day mark.
Analysis of the market rally
The stock market rally had another constructive day, with Wednesday’s losers generally finding support, while recent big winners resisted significant pullbacks.
The Nasdaq bounced above its 10-day line following Wednesday’s pullback. But it’s unclear whether it can make a big move without an extended pause or retreat. The Composite and the Nasdaq 100 are no longer stretching from their 50-day lines, but it doesn’t take much to look stretched again.
The S&P 500 is trading right at its 2023 high and just below a 52-week high. The Dow Jones rocketed past last week’s highs and is not far off its best levels of the year.
Overall, the winners and losers were about even after the frontrunners won decisively in the previous two sessions.
The Russell 2000 and S&P MidCap 400 held nearly all of Wednesday’s strong gains.
The First Trust Nasdaq 100 Equal Weighted Index ETF (QQEW) was up 0.85%, still hovering around its 52-week highs.
The Invesco S&P 500 Equal Weight ETF (RSP) posted small gains after back-to-back gains of 0.7%.
Ideally, the Nasdaq and many leading technology stocks would pause for a while or retreat modestly while other sectors take over on a larger scale. There have been signs of that over the past week, but it may not last.
Leadership can rotate, or expand. At the moment there are not many stocks with buy signals.
Software had a rough Wednesday, though chart damage depended on whether individual names were extended or whether they were recent breakouts hovering around buy points. Some of these names can recover quickly, but others cannot. Chipmakers, which generally outperformed on Wednesday, have a number of stocks showing constructive action.
The housing stock is generally showing strength. Travel is moving, but not many stocks seem usable right now. BA stocks are among several aerospace names showing strength along with machinery and industrial games in general. Some makers of biomedical and medical products are doing relatively well.
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What to do now
The stock market rally is on a confirmed uptrend, with the Nasdaq and S&P 500 at 2023 highs and some signs of improvement across the board. So investors may be looking for more exposure, although buying opportunities are limited.
A number of stocks from a wide variety of sectors are setting up or possibly doing so, moving forward to buy points and bullish pullbacks. Keep your watchlists up to date.
Adapt to market conditions and leadership as they are, not as you want them to be.
Read The Big Picture every day to stay in sync with market direction and leading stocks and sectors.
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