Dow Jones futures fell slightly Thursday night, while S&P 500 futures retreated modestly and Nasdaq futures retreated strongly as Amazon stock and Pinterest (PINS) sold off after the S&P 500 and Dow Jones rose Thursday to record highs in a quietly bullish stock market rally.
Amazon stock tumbled on a sales miss while PINS stock plunged on users. SWKS stock and Twilio also retreated, but TEAM stock was a big winner.
Stock Market Rally Yields Breakouts
The stock market rally had a solid session Thursday. The Nasdaq crept higher, but all in all it’s probably good for the tech-heavy index to have a do-nothing day. Meanwhile, the Dow Jones and S&P 500 rose modestly to record highs as small caps had a solid gain and overall breadth improved.
Most of all breakouts and buying opportunities picked up, with more sectors in leading roles. Tesla (TSLA) flashed an aggressive entry while Align Technology (ALGN) and chipmaker Maxlinear (MXL) broke out on earnings, along with Tempur Sealy (TPX) and Hilton Worldwide (HLT). Meanwhile, Steel Dynamics (STLD) broke out while Lennar (LEN) cleared an early entry, both as rivals reported strong earnings.
Meanwhile, the steel, mining, chip and hotel groups and other stocks also made bullish moves — Arcelor Mittal (MT), U.S. Steel (X), Teck Resources (TECK), Qualcomm (QCOM) and Hyatt (H) to name a few — bolstering the group strength and reinforcing the leadership diversity.
Tesla stock and Steel Dynamics are on IBD SwingTrader. TEAM stock is on IBD Long-Term Leaders. STLD stock was Thursday’s IBD Stock Of The Day, while Lennar was Wednesday’s Stock of The Day and Mittal was Tuesday’s.
Dow Jones Futures Today
Dow Jones futures fell 0.25% vs. fair value. S&P 500 futures slid 0.6%. Nasdaq 100 futures retreated 1.15%. Amazon stock was the big drag on tech futures, with Pinterest, Skyworks and others falling in sympathy.
Stock Market Rally Thursday
The stock market rally had a constructive session. The Dow Jones Industrial Average rose 0.4% in Thursday’s stock market trading. So did the S&P 500 index. The Nasdaq composite edged up 0.1%. The Russell 2000 popped 0.8%, but hit resistance at its 50-day line.
Tesla stock was a big Nasdaq 100 winner, rising 4.7% to 677.35. TSLA stock rebounded from its 200-day line and broke a trend line going back to January’s record high. Investors also could use 700.10 as an aggressive entry, with 780.89 as yet another key technical point.
The Tesla stock move came a few days after Q2 earnings. The EV giant reported strong growth but also pushed back Semi production, again, this time to 2022, with the Cybertruck also unlikely before next year. Late Thursday, CEO Elon Musk confirmed Tesla will hold an “AI Day” on Aug. 19.
Meanwhile, traditional automakers also rallied, with Ford (F) and General Motors (GM) up more than 3% on Ford’s results, close to flashing buy signals. BYD Co. (BYDDF), a Chinese EV and battery maker, popped 3.2%, breaking the trend line in a handle within a very deep base.
Among the best ETFs, the Innovator IBD 50 ETF (FFTY) rose 0.4%, while the Innovator IBD Breakout Opportunities ETF (BOUT) climbed 0.5%. The iShares Expanded Tech-Software Sector ETF (IGV) edged up 0.1%. The VanEck Vectors Semiconductor ETF (SMH) jumped 1.9%.
SPDR S&P Metals & Mining ETF (XME) leapt 4.7% and Global X U.S. Infrastructure Development ETF (PAVE) advanced 1.4%. U.S. Global Jets ETF (JETS) dipped 0.25%. SPDR S&P Homebuilders ETF (XHB) popped 2.9%. The Energy Select SPDR ETF (XLE) climbed 1% and the Financial Select SPDR ETF (XLF) 1.1%.
Amazon earnings topped views, but revenue came in light. The e-commerce and cloud-computing giant also guided lower on Q2 sales.
AMZN stock slumped 7.5% in overnight trade, signaling a move back into its base. Amazon stock had dipped 0.8% to 3,559.92 on Thursday. Shares have been holding in range from a cup-with-handle buy point of 3,524.96, according to MarketSmith analysis.
Amazon’s weak sales aren’t good news for Etsy (ETSY), which fell after hours.
Twilio reported a smaller-than-expected loss on booming revenue growth. But the communications software maker gave mixed guidance.
TWLO stock fell 2% in extended action. Shares edged down 0.5% on Thursday to 392.20. Last week Twilio stock briefly cleared early entries from 403.50 or 405.90, with the latter arguably a double-bottom buy point.
Pinterest earnings beat estimates but user growth came in light.
PINS stock plunged 19% overnight. Shares already slumped 6% on Thursday to 72.04, falling in sympathy with FB stock after popping last week on blowout Snap (SNAP) earnings. Pinterest stock has an early entry of 81.87, though investors could find a slightly lower entry from a trend line starting with the April high. Pinterest stock has an official buy point of 90.
Skyworks earnings and revenue just edged past views.
SWKS stock fell 5%, back below a buy point. Shares of the Apple iPhone chipmaker rose 2.4% to 196.87 on Thursday, perhaps bolstered by fellow 5G and iPhone chipmaker Qualcomm. That pushed SWKS stock back above a 193.74 buy point from a cup-with-handle base. But with earnings on tap that would have been a highly risky buy.
Qorvo (QRVO), another 5G and iPhone chipmaker with earnings due next week, slumped overnight.
Apple stock edged up 0.5% to 145.64 on Thursday. Shares have fallen modestly this week following earnings but are near record highs.
Atlassian earnings fell less than expected while fiscal Q4 revenue growth easily topped consensus. The collaboration software maker also guided higher for the current Q1.
TEAM stock gapped up 13%. Shares had dipped 0.85% to 266.79 on Thursday. Atlassian stock had been consolidating for several weeks after clearing a prior base in mid-June. Investors could buy TEAM stock as a breakout or earnings gap-up from this shelf-like pattern.
Market Rally Analysis
The stock market rally had a solid session. Amid muted gains for the Nasdaq, the Dow Jones and S&P 500 hit record highs while the Russell 2000 and several sector ETFs had robust gains. All that points to improved market breadth.
Meanwhile more leading stocks flashed buy signals, with the increased diversity of breakouts also underscoring improved breadth. And those buying opportunities often came with peers also actionable or setting up. Whether it’s Tesla stock, Steel Dynamics or Hilton, it’s always a good sign to see peers performing well.
While the Nasdaq 100 is still not far from looking extended and the advance/decline remains lackluster at best, the past couple of days have been positive for active investors.
What To Do Now
The past couple of days have offered opportunities to make some buys. It’s been a good time to add some diversity to what may have been a very tech-focused portfolio.
But there are multiple reasons to not rapidly increase exposure. The market rally is in a confirmed uptrend but it’s still prone to choppy behavior. Nasdaq futures suggest that growth stocks will start Friday on the back foot.
Make sure you don’t chase extended stocks, putting you at high risk for a stock or broader market pullback. Sometimes leading stocks don’t give you much time to buy right, whether it’s Tempur Sealy or ALGN stock on Thursday or Advanced Micro Devices (AMD) on Wednesday. So be ready to jump on stocks as close to the buy signal as possible. That means building and updating your watchlists, setting alerts and paying attention to the market.
Read The Big Picture every day to stay in sync with the market direction and leading stocks and sectors.
Please follow Ed Carson on Twitter at @IBD_ECarson for stock market updates and more.
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