Dow Jones futures rose modestly early Friday, along with S&P 500 futures and Nasdaq futures. Lululemon, Costco and Broadcom posted earnings after the close.
Stocks rallied modestly on Thursday, but recovered only a small fraction of the losses over the past several days. Investors should remain cautious amid subdued market activity. The S&P 500 is below its 200-day line, with most indexes hitting resistance at their 21-day moving averages.
Semiconductor stocks did well with the chipmaker Nvidia (NVDA) was the best performance of the S&P 500 mid-Thursday. But chip-equipment makers are generally in better shape KLA Corporation (KLAC), Axelis Technologies (ACLS) and Ultra Clean Holdings (UCTT) flashing Jupiter buy signals. ASML (ASML) and Utility items (AMAT) are among the nearest Buy points.
COST stock was little changed overnight after Costco missed earnings and sales views. Costco shares lost some ground in Thursday’s regular session but are down nearly 11% so far this month.
LULU stock fell in extended trading after the yoga apparel retailer guided slightly lower for the crucial holiday quarter. Lululemon earnings slightly topped Q3 views. Lululemon shares rose 0.6% to 374.11 on Thursday, finishing within range of a 370.56 cup-with-handle buy point. But it is set to fall outside that buying area.
AVGO shares rose solidly in premarket trading Broadcom revenue The chip-and-software company also topped guidance views by raising its dividend. Broadcom shares rose 2.4% to 531.08, just below the 200-day line. Last week’s high of 552.42 may provide some sort of entry.
Dow Jones Futures Today
Dow Jones futures rose 0.3% vs. fair value. S&P 500 futures rose 0.4% and Nasdaq 100 futures rose 0.5%.
Crude oil futures rose slightly.
Stock market rally
The stock market rally had a solid session, with indices moving mostly sideways after the first hour of trading.
The Dow Jones industrial average rose 0.55% on Thursday Stock market trading. The S&P 500 index rose 0.75%. The Nasdaq composite rose 1.1%. The small-cap Russell 2000 advanced 0.7%.
U.S. crude was down 0.8% at $71.46 a barrel, with some big intraday swings. Crude futures are now at levels the Biden administration is signaling to replenish strategic petroleum reserves, which have been drained to long-term lows this year to keep energy costs down.
The 10-year Treasury yield rose 8 basis points to 3.49%, but that was a day after falling to 3.41% on Wednesday.
Among growth ETFs, the iShares Expanded Technology-Software Sector ETF (IGV) increased by 1.8%. VanEck Vectors Semiconductor ETF (SMH2.55% up. Nvidia stock, ASML, KLA and AMAT are all SMH holdings. Reflecting the more speculative story stocks, the ARK Innovation ETF (ARKK) gained 2.4% and the ARK Genomics ETF (ARKG) 2.2%
SPDR S&P Metals & Mining ETF (XME) 0.3% and Global X US Infrastructure Development Pvt.sidewalk0.8% improved. US Global Jets ETF (JETSdecreased by 0.3%. SPDR S&P Homebuilders ETF (XHBrose 0.6%. Energy Select SPDR ETF (XLE) and Fund Selection SPDR ETF (XLF) pushed higher by 0.1%. Health Care Select Sector SPDR Fund (XLVrose 0.9%.
Chip stocks near buy points
Many chip-gear makers are located in or near buy zones. In general, semiconductor-equipment makers have some bleak forecasts for the coming year, but chip-gear stocks will be far below that before business returns.
KLAC shares rose 2% to 395.92, clearing some buying points between 392.60-396.02. Trading was fairly light, but there were several big gains on spiking volume as KLA rebounded from bear-market declines in October and November. The Relative strength line Stocks are at record highs, even at January highs. KLA stock is a long-term leader, but the time to buy a stock as LTL is when it is near the 200 or 50-day lines.
ACLS stock rose 4.9% to 81.93, returning above the 80.34 cup-with-handle buy point. MarketSmith analysis. Axelis has a nice extension from the 50-day line, but the 21-day line is more of a bet. ACLS stock’s RS line is at a 15-year high.
UCTT shares rose 5.6% to 36.59, having topped at 36.10. Handle with cup Buy point and reached its best levels since April. With no frontal ascent, the base formed to the right. But the handle mostly formed above the 200-day line. RS line for UCTT stock is at an 8-month high.
ASML shares rose 0.9% to 606.89. The stock fell from its Oct. 13 bear market to Nov. 15. Since then, the high-end Dutch semiconductor-equipment giant has been consolidating comfortably above the 200-day line, at best levels since April. Approaching the 21 day sequence. A break above the recent high may provide initial entry. Ideally, ASML will bounce back from the 21-day line or make a perfect base.
AMAT shares rose 2.4% to 108.61 on Thursday. The stock is just above its own 200-day line since Oct. 13-Nov. 15 runs. There are applied materials Three weeks—tight The pattern provides a buy point of 112.22. Investors can use a short trendline, perhaps Thursday’s high of 109.43 as a trigger, a slightly earlier entry.
Meanwhile, chip giant Nvidia rebounded from its 21-day streak and rose 6.5% to 171.69. NVDA stock is now below its 200-day line. An aggressive trader can decisively use the 200-day line as a buy signal. But it’s better to wait for Nvidia stock to clear the 200-day and create an integration a la ASML or AMAT to spy a safe entry.
Market rally analysis
The stock market rally broke the recent losing streak with modest to solid gains. But it did not fundamentally change the technical picture. Major indices move sideways, finding support at key levels but hitting resistance.
The S&P 500 index managed to close again above its 21-day moving average. The benchmark index should bounce back above its 200-day moving average and December 1 high.
The Nasdaq Composite found support at its 50-day moving average, regaining the 11,000 level, but falling shy of its 21-day. The Russell 2000, which fell below its 200-day and 21-day lines earlier this week, retreated from its 21-day intraday high.
The Dow Jones, which closed slightly above its 21-day moving average on Wednesday, rallied modestly on Thursday.
Markets don’t make any decisive moves due to breaking news.
The November producer price index is due out on Friday morning. Wholesale inflation should continue to show steady decline. But the real concern lies in service prices. The November CPI report is set for December 13, with the year-end Fed meeting concluding the following day.
Those events can be catalysts for larger market moves up or down. Sure, the indices had big moves in the past month around the October CPI, Fed Chair Powell’s speech and more, but on the downside, choppy action continued.
What to do now
Overall exposure should be minimal. The current market trend is sideways and bearish. It is a difficult environment to build trading stocks. If you make a new purchase and make a good profit, get a fractional profit quickly. Many promising stocks have clocked around 5%, 10% gains over the past several weeks.
Many stocks from different sectors are formed. So keep your watch list updated.
According to Big picture Each day should be in sync with the direction of the market and the leading stocks and sectors.
Follow Ed Carson on Twitter @IBD_ECarson For stock market updates and more.
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