Dow Jones futures were up slightly late Thursday, along with S&P 500 futures and Nasdaq futures. The stock market rally started off Thursday morning’s highs as the major indices neared new resistance levels, while energy prices and government bond yields rallied.
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shares of Rivian (RIVN) fell more than 2% overnight after the EV startup reported mixed second-quarter results after the market close. RIVN shares rose 4.1% on Thursday. Enlightenment (ILMN) fell 17% after missing analysts’ Q2 targets and issuing weak guidance.
Entering the late earnings season, the majority of June quarterly earnings so far have met or exceeded expectations. But the market continues to treat missteps mercilessly. It’s a healthy reminder that investors should remain agile and be prepared to react to market strengths or weaknesses.
onsemi (ON), EQT Corp. (EQT), Penske Automotive Group (PAG), Builders FirstSource (BLDR) and Tesla (TSLA) are working on grip or grip-like patterns. EQT and BLDR stock are actionable, while ON stock quickly pulled back from an early entry Thursday.
Builders FirstSource is on SwingTrader and was Thursday’s IBD stock of the day. ON camp is on the IBD 50.
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 0.15%.
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 started strong but then eased off with indices being mixed.
The Dow Jones Industrial Average settled down less than 0.1% in trading on Thursday. The S&P 500 Index posted a fractional loss. The Nasdaq Composite ended the day down 0.6% on software stocks working day (WTAG) and octa (OKTA) at the end of the index. Small-cap Russell 2000 ended up 0.3%.
US crude prices rose 2.6% to $94.34 a barrel. Natural gas prices increased by 8.2%.
Rising oil and gas prices are good news for energy stocks, which helped support Thursday’s stock action. However, if the energy price rally continues, it could stall or reverse some easing at the pump and inflation overall.
The 10-year Treasury yield opened lower but rebounded, rising 10 basis points to 2.89%, the highest yield in three weeks. And that’s despite another tame inflation report.
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Stocks near buy points
Onsemi shares benefited this week NVIDIA (NVDA) and micron (MU) warns to break his big run and carve a handle. It now has a buy point of 69.36 within a seven month consolidation. On Thursday, ON shares broke the downtrend in grip to hit 68.74 for the day, but shares closed down 0.2% at 66.36.
EQT stock is trading at a 46.81 cup with Henkel buy point. The natural gas business has found support around the 21-day and 50-day moving averages. On Thursday, EQT shares rose 5.3% to 45.80, extending the recovery from the 21-day moving average. But the volume was below average.
BLDR stock has a 74.58 cup with Henkel buy point. Shares rose 2.8% to 70.26 in above-average trading on Thursday. The bounce off the 200-day moving average and the break of the handle’s downtrend offered an aggressive entry.
PAG stock was up 0.8% to 118.28, moving towards a 121.55 Cup with Henkel buy point, according to MarketSmith analysis.
Tesla shares fell 2.6% to 859.89. Unlike the other stocks mentioned here, the EV giant has no real grip and is trading below the 200-day moving average. A bullish move above the 200-day moving average, perhaps clearing last week’s high of 940.82 could offer an aggressive entry.
Analysis of the market rally
The stock market rally started with solid gains on Thursday, building on Wednesday’s big rise. But key indices retreated and the Nasdaq closed lower. Trading was higher with Nasdaq volume rising significantly.
The Russell 2000 peaked just below its 200-day moving average for the day. Big cap indices are a little further from this long-term average, but the Nasdaq met resistance at 13,000.
While the market rally just entered a power trend after Wednesday, the last power trend fizzled out almost immediately in early April. Market direction seems uncertain in the near term.
Perhaps the market is running higher quickly like the major indices did on Wednesday after Monday morning’s reversal. Or maybe this is the beginning of a retreat.
A pullback would cause more stocks to form handles and allow the moving averages to catch up. But the pullback could turn out to be something more serious.
The market leadership was expanded.
The energy sector is reviving, particularly natural gas stocks like EQT shares. Oil and natural gas prices are recovering. If this continues, fossil fuel stocks could take the lead again.
But if energy stocks thrive, other sectors will struggle in 2022 on broader economic concerns. If inflation concerns push Treasury yields sharply higher, growth stocks in particular could be hit.
For now, hot chip stocks like Onsemi have taken a breather recently but could edge slightly higher, especially if the market rally continues to rise.
Lithium is performing strongly while some metals stocks look interesting. Medicine continues to be a strong area, although leadership will change in various healthcare segments.
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What now
It’s not necessarily a good time to add exposure to the very short term, except possibly in the energy sector. Consider taking some partial profits.
Work on your watch lists, long and short. With major indices and many stocks hitting important levels, often with low volume, there could be a number of short selling opportunities if the market pulls back.
If nothing else, the mere consideration of short setups can help temper an overly optimistic mindset. Openness is the key to long-term investment success.
Read The Big Picture every day to keep up with 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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