Dow Jones futures were slightly changed Thursday night along with the S&P 500 futures and Nasdaq futures. The stock market rally withdrew from a hot inflation report, with the S&P 500 index hitting a record high and government bond yields hitting new lows.
Tesla stock is trading close to key levels ahead of tonight Tesla (TSLA) Model S Plaid delivery event.
Several stocks broke out or flashed buy signals, including RH (RH), Signed jewelers (SIG), Zscaler (HP), CrowdStrike (CRWD), Google parent Alphabet (GOOGL) and Adobe (ADBE).
Meme stocks sold, inclusive GameStop (GME), AMC Entertainment (AMC), Clover health (CLOV), Bed Bath & Beyond (BBBY) and Workhorse group (WKHS).
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House builders fell sharply, including Century Communities (CCS), LGI Homes (LGIH) and DR Horton (DHI). It continues their weak result despite sliding government interest rates.
Several shares sold were sold as price quotes on shares after the sales plans knocked them out earlier in the week. These include Celsius (CELH), PLBY Group (PLBY) and Rev Group (REVG). All three lost 15% or more. The CELH stock has a clearly failed breakout, while the PLBY stock wiped out an early entry. REVG stock bottomed out.
Adobe and Google are on IBD Leaderboard and Long-Term Leaders. Google, CELH stock and CRWD stock are on IBD 50.
Dow Jones Futures today
Dow Jones futures were even at fair value. The S&P 500 futures were just above fair value and the Nasdaq 100 futures rose 0.1%.
A two-party group of 10 senators – five from each party – say they have reached a “preliminary understanding” on an agreement on infrastructure spending without explicit tax increases. The package reportedly includes $ 579 billion in additional spending. Including baseline spending would be $ 974 billion over five years or $ 1.2 trillion over eight. Senators propose to index the gas tax to inflation, give a de facto increase and use unused Covid funds.
But it is unclear whether President Biden or congressional leaders from both parties will return.
Keep in mind that overnight trading in Dow futures and elsewhere does not necessarily translate into actual trading in the next regular stock market session.
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Stock market rally
The stock market rally gathered Thursday’s open, but then withdrew late in the morning, with the Nasdaq briefly turning negative. But the major indices rose again.
The 10-year government yield initially rose modestly relative to the warm inflation report, but turned lower to 1.44% and set new three-month lows. Bond traders do not seem to be worried about inflation or the Federal Reserve meeting next week.
Dow Jones Industrial Average rose 0.1% in Thursday’s stock market trading with Apple (AAPL) and Larva (CAT) weighing on blue chips. The S&P 500 index rose 0.5%. The Nasdaq composite advanced 0.8%. Small-cap Russell 2000 withdrew 0.8%.
Among the best ETFs, the Innovator IBD 50 ETF (FFTY) withdrew 1.7% due to some sharp individual losers. Innovator IBD Breakout Opportunities ETF (BOUT) rose 0.5%. IShares Expanded Tech-Software Sector ETF (IGV) rose 1.8%. ADBE share is component no. 1 in IGV, which also owns CRWD and ZS shares. VanEck Vectors Semiconductor ETF (SMH) rose 1.3%.
The SPDR S&P Metals & Mining ETF (XME) dipped 0.4% and the Global X US Infrastructure Development ETF (PAVE) slipped 1%. US Global Jets ETF (JETS) also fell by 1%. SPDR S&P Homebuilders ETF (XHB) withdrew 1.1% with ETF losses minimized because RH shares are component # 1.
Reflecting more speculative history holdings, the ARK Innovation ETF (ARKK) increased by 1.9% and the ARK Genomics ETF (ARKG) by 2.7%. ARKK closed just below its 50-day and 200-day lines, while ARKG regained those levels on Wednesday. The Tesla share is holding No. 1 for ARK Invest across its ETFs.
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Tesla Model S Plaid Event
Tesla is holding an event starting at 19.00 PT, showing the start of deliveries for the Model S Plaid, the renewed version of the luxury electric sedan. The EV giant stopped Model S and X production for several months when it switched to “Plaid” versions.
Tesla says the Model S Plaid can go from a rolling start to 60 miles per hour in just under two seconds.
On Wednesday, Tesla raised the price of its Advanced Plaid by $ 10,000 to $ 129,990.
The Model S Plaid event comes days after Elon Musk canceled Plaid Plus, saying Plaid is “so good.” Plaid Plus, which was priced well above Plaid, was to have a range of over 500 miles.
Cancellation of Model S Plaid Plus may reflect additional issues with mass-producing 4680 battery cells. In that case, it would be a bad sign for Tesla Semi and Cybertruck, both of which are meant to use the 4680 cells.
The Model S Plaid event takes place long after trading after opening hours, so Tesla stock investors will not weigh in until Friday’s lead market.
On Thursday, Tesla stock popped 1.9% to 610.12 and regained its 200-day line. The TSLA stock remains below its sliding 50-day line.
The RH stock rose 16% to 707.14, rebound from its 50-day line and breaking a trend line. The exclusive furniture retailer reported booming earnings and revenue growth, which led higher sales and margins. The RH stock is 8.1% above its 10-week line, so it can be traded here. But investors could wait to see if it forms a handle. The RH stock is on track to have a base with a buy point of 733.15 after Friday.
The signet stock vaulted from its 50-day line to a record high, clearing a flat base with a buying point of 68.39 / 68.46. Shares reached an intraday high of 74.80, but then cut gains before returning somewhat. The signet stock closed 14% up to 69.58.
The line of relative strength for SIG stocks reached a new high. The RS line, the blue line in the charts, tracks a stock’s performance relative to the S&P 500 index.
Zscaler shares jumped 4.55% to 204.91 and moved above a double-bottomed buy point of 199.60 after hitting resistance several times just below 200. The last time was May 26 after strong Zscaler earnings. The ZS stock broke a small trend line earlier in the week.
The RS line for Zscaler stock is outside the February peak, but has a height of three months.
CrowdStrike, another cybersecurity game with a chart similar to ZS, jumped 6.85% to 228.60 and broke past resistance just around 227. CRWD stock was actionable from a short trend line shift; again, just like ZS stock. The official purchase for the CRWD share is 251.38.
Adobe stock rose just over 4% to 535.52, a record close and clearing a 525.54 early entry in a nine-month consolidation. The ADBE stock is 5.8% above its 10-week line, which could be an attractive buying area for long-term executives. But Adobe earnings fall due on June 17, giving new investors some time to build a cushion in the ADBE stock.
The RS line for Adobe stock is rising again, but has fallen significantly since September last year.
Google stock rose 1.1% to 2,435.13, edging a 2,431.48 buy point from a flat base. The RS line hit record highs with the GOOGL stock, giving the weekly MarketSmith chart a very bullish blue dot.
The GME stock threw 27% to 220.39. GameStop stock has now fallen 11% for the week despite rising in the previous three sessions.
Late on Wednesday, GameStop topped earnings margins, appointing two Amazon executives to be its CEO and CFO. But it also said it might sell 5 million shares of GME shares at a time when investors are penalizing stock quotes. GameStop also unveiled an SEC probe related to stock trading.
Managers also did not take up questions again in a short GameStop earnings call.
Other Meme stores
Clovis Health fell 15% to 14.34 after reversing from record highs Wednesday to closing down 24%. While the CLOV stock has not erased Tuesday’s 86% gap-up rise, it has fallen below today’s low. So anyone who actually bought CLOV shares on Tuesday is down now.
The AMC stock slid 13% to 42.81. Since the wild rift on June 2, the AMC stock has remained within today’s trading range.
WKHS stock slid 11%. BBBY shares fell 8%.
Most investors should avoid meme stocks. The wild moves offer the potential for huge gains, but also massive losses. Given the weak fundamental and often poor corporate outlook, most of these stocks are likely to see huge declines over time.
But if you are going to play meme stocks, buy them as they clear some probable resistance on a chart. Do not pursue them. Consider using options so you can dimension your potential loss up front. Consider at least partial profits quickly, and be ready to pay out before you see a massive gain become a loss.
Analysis of market rally
The S&P 500 index finally moved above its early May high to a full-time high despite the late morning swing. The Dow Jones and Nasdaq close in on record territory. Russell 2000 retires, but after a strong race.
However, the S&P 500 has pushed higher and has not shown real power in the last few weeks. Tracking volume on the major indices is difficult when meme stocks are in play, with CLOV stocks trading more than 700 million stocks on Tuesday.
But new buying opportunities continue to appear, as RH, Zscaler and even Adobe stock show. Some stocks again rose bullish from early losses, inclusive Roblox (RBLX). Miners and many other stocks are calmly forming positive consolidations.
Chip gear manufacturers and many drugs had solid sessions.
But it is still a difficult stock market rally.
Housing builders are collapsing despite falling government interest rates. Finance is struggling. After opening higher as 10-year interest rates pushed up, they retreated again as interest rates hit new lows.
The brutal sales of CELH shares and others announcing and pricing stock quotes are something to note. Sometimes stocks quickly shake stock-offering news, but not always. With a lot of new IPOs in recent months, investors need to be ready for stock offerings and lock out expiration.
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What should I do now
Buying as close to the place of purchase as possible, at least with your original position, is crucial in the current market environment. When expanding a stock, do not hunt for it.
To avoid missing out, do your homework. Build these watch lists, take a closer look at a select handful of near-trading stocks. Get involved with the market and use warnings whenever possible to catch breakouts when they happen. That way, you can buy the right stocks at the right time.
Even if you do everything right, some of your purchases will struggle or fail. The key is to keep these losses small.
Read the big picture every day to be in sync with the market direction and leading stocks and sectors.
Follow Ed Carson on Twitter at @IBD_ECarson for stock market updates and more.
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