Dow Jones futures trended higher overnight, along with S&P 500 futures and Nasdaq futures. Tesla (TSLA) is hosting a “cyber rodeo” at its Austin facility Thursday night, with Model Y deliveries expected to begin.
x
The stock market rally tested key support levels Thursday morning as US Treasury yields continued to rise amid hawkish language from the Federal Reserve. But the major indices rallied to close slightly higher.
Investors should watch out for sectors that are performing but be cautious about new purchases overall. Exxon Mobile (XOM), Lockheed Martin (LMT), horizon therapeutics (HZNP), Dollar General (DG) and O’Reilly car (ORLY) are five stocks in leading sectors that are at or near buy points.
Tesla stock is on the IBD leaderboard. Tesla and HZNP stocks are on the IBD 50. XOM stocks are on the Big Cap 20, a list currently dominated by energy and commodity stocks. ORLY stock was the IBD stock of the day on Thursday.
Dow Jones futures today
Dow Jones futures rose 0.1% from fair value. S&P 500 futures were up 0.1% and Nasdaq 100 futures were up 0.2%.
US crude prices rose 1%.
Keep in mind that overnight action in Dow futures and elsewhere doesn’t necessarily translate to actual trading in the next regular trading session.
Join IBD experts as they analyze actionable stocks in the stock market rally on IBD Live
stock market rally
The stock market rally sold off in the morning but then rebounded with slight gains.
The Dow Jones Industrial Average rose 0.25% in trading on Thursday. The S&P 500 index rose 0.4%. The Nasdaq Composite rose less than 0.1%. Small-cap Russell 2000 fell 0.4%.
US crude prices fell 0.2% to $96.03 a barrel. Natural gas prices jumped to their highest closing level since December 2008.
The 10-year government bond yield rose four basis points to 2.65%, a new three-year high, slightly widening the yield curve.
St. Louis Fed Chairman James Bullard, one of the more hawkish policymakers, said the policy rate, currently between 0.25% and 0.5%, should be at 3.5% to contain high inflation fight. The Federal Reserve is likely to hike rates by 50 basis points at each of the next three policy meetings, with balance sheet trimming beginning after the event in early May.
ETFs
Among the best ETFs, Innovator IBD 50 ETF (FFTY) is up 0.6%, while Innovator IBD Breakout Opportunities ETF (BOUT) is up 0.9%. The iShares Expanded Tech-Software Sector ETF (IGV) edged up 0.45%. The VanEck Vectors Semiconductor ETF (SMH) closed just above breakeven.
The SPDR S&P Metals & Mining ETF (XME) was up 2.2% and the Global X US Infrastructure Development ETF (PAVE) was trending higher. The US Global Jets ETF (JETS) fell 1.4%. The SPDR S&P Homebuilders ETF (XHB) was down 0.5%. The Energy Select SPDR ETF (XLE) was up 1.1%, with XOM stock a key component. Financial Select SPDR ETF (XLF) is down 0.1%. The Health Care Select Sector SPDR Fund (XLV) gained 1.9%
Reflecting more speculative story stocks, ARK Innovation ETF (ARKK) fell 1.2% and ARK Genomics ETF (ARKG) 0.7%. Tesla stock is Ark Invest’s #1 ETF.
The five best Chinese stocks to watch right now
Exxon stock
Exxon stock rose 1.7% to 85.05, continuing to consolidate around its 21-day moving average and just above its 10-week moving average. Investors could buy XOM shares here or if they surpass the March 25th high of 85.49. The oil major should have a decent base after the end of next week.
Several other energy stocks are holding up, including Exxon’s peers rafters (CVX) and sleeve (SHEL) and coal producer Arch Resources (ARCH) and the North Shore Global Uranium ETF (URNM).
Lockheed stock
Lockheed shares rose 2.4% to 465.51, overcoming a short-term high as it works on a brief consolidation. But LMT stock is 4.9% above its 21-day moving average and 10.1% above its 50-day moving average. Shares could form a new base by the end of next week. A longer pause would allow the major averages to catch up.
Lockheed shares erupted in late February as Russia’s invasion of Ukraine began. Stocks raced higher for a few days as investors bet on higher defense spending, particularly in Europe and specifically on arms, in both the short and long term.
Northrop Grumman (NOZ), General dynamics (GD) and Raytheon Technologies (RTX) are also consolidating, with RTX stock already showing a flat base.
Horizon stock
Horizon stock rose 3.2% to 112.39, breaking through a grip buy point of 110.13 in a consolidation stretching back to late October. This 110 area was a short-term resistance late last year.
Several biotech and drug stocks have shown strength. Apex Pharma (VRTX), Regeneron (REGN) and Eli Lilli (LLY) are now extended while Pfizer (PFE) indicates a possible trend line entry. In general, medicine is doing well as health insurers hit new highs and device makers build the right side of the base.
Dollar General Stock
Dollar General shares rose 1.1% to 241.69, hitting a record high and climbing within a buy zone. On Wednesday, DG shares rose 4.2% to 239, according to MarketSmith analysis, solving a buy point of 232.87 cup-with-henkel. The line of relative strength, the blue line in the provided chart, is at a 52-week high.
Several discounters are doing well as investors bet frugal consumers will focus their spending on budget staples. money tree (DLTR) and Costco Wholesale (COST), which broke out a few weeks ago, is now being slightly extended. Walmart (WMT) is technically in a buy zone but appears extended from a safer early entry. goal (TGT) is starting to recover.
O’Reilly Stock
O’Reilly stock rose 3.7% to 726.83, hitting a new high. Investors could use 705.10 as an alternative entry or handle, although a previous 687.33 cup with handle buy point was still technically valid.
The line of relative strength is near a new high on a daily chart and at record levels on a weekly chart.
With new cars scarce and expensive, and with consumers trying to rein in spending amid high inflation, many drivers are keeping used cars longer and doing more auto work at home. rival of O’Reilly AutoZone (AZO) erupted from a double bottom base on Thursday.
Tesla Austin “Cyber Rodeo”
CEO Elon Musk is scheduled to perform at 10:00 p.m. EST at an event at Tesla’s Austin facility dubbed the Cyber Rodeo. Tesla is expected to officially start delivering the Model Y from the factory. This follows the first deliveries from the Berlin area factory last month. The two new plants will significantly expand Tesla’s capacity, but production is expected to ramp up slowly.
In the longer term, Austin will produce other vehicles, most notably the Cybertruck. Musk said earlier this year that he intends to finalize the design of the Cybertruck this year, with production “hopefully” beginning next year.
Meanwhile, the Tesla factory in Shanghai has been closed since March 28 as the city goes into lockdown due to rising Covid cases. It’s possible that Tesla will soon be able to resume production in Shanghai, with workers staying on site.
Tesla stock
Tesla Austin’s “cyber rodeo” will be late for extended trading, so investors will weigh Friday morning.
On Thursday, Tesla shares rose 1.1% to 1,057.26, turning higher with the market. Stocks are still in a pullback after hurtling onto a trendline entry earlier this week. The EV giant could form a grip in a deep cup bottom. A dip slightly below the 21-day MA and the 1,000 level could help shake off some weak holders. A longer handle would also see the 50-day moving average catch up a bit.
As highly-rated growth stocks fall out of favor as interest rates rise, Tesla stock stands out as an exception. Can it keep up in this environment or go higher?
Tesla earnings are due April 20th.
Tesla vs. BYD: Which Booming EV Giant Is the Better Buy?
Analysis of the market rally
The stock market rally delivered some much-needed upward movement and found support at key levels on Thursday.
The market rally entered the “uptrend under pressure” on Wednesday as the major indices fell below their 21-day moving averages. They weakened further on Thursday morning, with the Nasdaq Composite and Dow Jones undercutting their 50-day moving average.
But the cops fought back in the afternoon. Nasdaq and Dow Jones jumped above the 50-day moving average again. However, while the Dow reclaimed its 21-day price, the Nasdaq encountered resistance at this level. The S&P 500 has recaptured its 200-day and 21-day moving averages.
The return of the Nasdaq above its 21-day moving average would bode well for the market rally.
So width would be better. There were more losers than winners on the NYSE and Nasdaq. New lows significantly surpassed new highs on Thursday. The small-cap Russell 2000 and the S&P MidCap 400 rebounded from their lows on Thursday but ended slightly lower. Both fell below their 50-day moving average on Wednesday.
Growth stocks are still damaged. Meanwhile, concerns are mounting that inflation – and the Fed’s rate hikes to combat inflation – will weigh on cyclical consumer spending more broadly.
Some sectors continue to perform well. In addition to commodities, medical devices, defense companies and discounters, investors can find that REITs and insurance companies are holding up well.
Time the market with IBD’s ETF market strategy
What now
Just because the major indices found support on Thursday doesn’t mean they will continue to do so. The market rally is under pressure. Investors should wait for further strength before increasing exposure across the board. Currently there are few setups while the growth sector faces a number of headwinds.
New purchases, if any, should be small and limited to stocks in strong sectors. Don’t get too hung up on a particular sector, even if it works.
Stay engaged. If the market rally breaks significantly down from here, investors will want to exit more positions and even move into full cash. On the other hand, a good few days and the market rally will look much better while a number of stocks will likely give buy signals.
In the latter scenario, investors want to be ready to act. So cast a wide net and keep working on your watch lists.
Read The Big Picture every day to keep up to date with market direction and leading stocks and sectors.
Please follow Ed Carson on Twitter at @IBD_ECarson for stock market updates and more.
YOU MAY ALSO LIKE:
Want to make quick profits and avoid big losses? Try SwingTrader
The best growth stocks to buy and watch
IBD Digital: Unlock IBD’s premium stock lists, tools and analysis today
3 top gainers in the S&P 500; HP increases; Twitter retreats
Here are the electric vehicles that will challenge Tesla in China