Dow Jones futures fall after the big market rally; Here’s what to do now

Dow Jones futures fell slightly overnight, along with the S&P 500 and Nasdaq futures. The stock market rebound had a strong Thursday, driven by positive reactions to earnings.

Dollar Tree (DLTR), Williams-Sonoma (WSM) and Macy’s (M) had good results and at least solid guidance. Even more encouraging? Burlington (BURL) and Nvidia (NVDA) stores increased despite weak forecasts. This suggests that markets have bad news due to cost pressures, supply chain issues and uncertain consumers.

Lithium reproduces Albemarle (ALB) and Livent (LTHM) through resistance zones, flashing buy signals. Delta Air Lines (DAL) bounced back above an aggressive entry, while Ashland Global Holdings (ASH) and WR Berkley (WRB) outperformed early buying points.

Key gains

Costco Wholesale (COST), Ulta Beauty (ULTA) and Zscaler (ZS) reported after the closure.

Costco’s earnings were in line, while sales exceeded third-quarter fiscal estimates. Shares fell 2% after rising 5.65% in the regular session on Thursday.

Ulta Beauty’s profits are easily surpassed, with a 21% increase in revenue. ULTA shares rose 7% overnight, indicating a gap above the 200-day and 50-day lines. Shares were up 7.1% from Thursday’s session.

Zscaler’s profits surpassed modestly, with the cybersecurity company also giving optimistic guidance. ZS shares rose 1% in expanded trading. Shares rose 7.2% on Thursday, but are still close to the 18-month low.

The shares of ALB are in the IBD classification. ASH shares were Thursday’s IBD shares. WRB shares were Tuesday’s shares.

The video embedded in this article talked about a major market day and analyzed the actions of Ashland Global, Cabot (CBT) and DLTR.

Dow Jones futures today

Dow Jones futures fell 0.1% from fair value. S&P 500 futures plunged 0.1% and Nasdaq 100 futures 0.2%.

The Commerce Department will release the April Consumer Revenue and Expenditure Report at 8:30 a.m. ET, offering a broad view of the health of consumer spending. The report’s inflation indicator is the Fed’s favorite.

Remember that overnight action on Dow futures and elsewhere does not necessarily translate into actual trading at the next normal stock market session.

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Stock market meeting

The stock market picked up momentum quickly on Thursday, with strong gains for major indices.

The Dow Jones Industrial Average was up 1.6% on Thursday. The S&P 500 index rose 2%. The composite Nasdaq recovered 2.7%. Russell 2000 small capitalization gained 2.2%

Several stocks, including Nvidia and Burlington stores, rebounded on Thursday despite weak guidance. It is a welcome change from the last few months, when stocks ran out with seemingly good news. It suggests that the market has made a price in bad news and bearish fears and is ready to recover.

Of course, it is never clear what the price is. Gap (GPS) and Workday (WDAY) skated overnight with poor results.

The price of US crude rose 3.4% to $ 114.09 a barrel.

The 10-year Treasury yield rose 1 basis point to 2.76%.

ETFs

Among the best ETFs, the Innovator IBD 50 ETF (FFTY) was up 2.6%, while the Innovator IBD Breakout Opportunities ETF (BOUT) was up 1.85%. The ETF of the iShares Extended Technology Software (IGV) sector advanced 2.1%. The VanEck Vectors Semiconductor ETF (SMH) gained 3.3%, with NVDA shares as a major stake.

The SPDR S&P Metals & Mining ETF (XME) was up 1.3% and the Global X US Infrastructure Development ETF (PAVE) was up 2.2%. The US Global Jets ETF (JETS) shot up 5.1%, with DAL shares as the main holder. SPDR S&P Homebuilders ETF (XHB) was up 3.9%. The Energy Select SPDR ETF (XLE) rose 1.1% and the Financial Select SPDR ETF (XLF) rose 2.3%. The SPDR Fund for the Selected Health Sector (XLV) rose 0.4%.

Reflecting more speculative stocks, ARK Innovation ETF (ARKK) rose 3.9% and ARK Genomics ETF (ARKG) 1.3%.

Top five Chinese stocks to watch now

Actions in shopping areas

Shares of Albemarle rose 7.4% to 255.05 in high volume, eliminating key resistance nearly 248 months ago. This is a legitimate entry into a deep cup base with an official point of purchase of 291.58. At the last minute on Monday, Albemarle sharply raised its year-round earnings guide for the second time in less than a month. ALB shares briefly cleared area 248 before withdrawing.

The line of relative strength is at a new high, a bullish sign. The RS line, the blue line of the provided graphs, tracks the performance of a stock against the S&P 500 index.

Livent shares rose 6.8% to 30.20, eliminating resistance just below 30 and offering early entry. The official point of purchase of the cup base is 33.14. In early May, the lithium producer crushed views on earnings and raised guidelines. The RS line for LTHM shares is at a new high.

Shares of Delta rose 5.8% to 40.83, moving above its 50-day and 200-day lines, as well as breaking a short-term trend since the April 21 peak. of 46.27. Shares of DAL and other travel games rebounded on Thursday, driven by high-income forecasts from Southwest Airlines (LUV) and JetBlue (JBLU).

Delta stocks have hit resistance in the 45-46 area several times over the past year. Consolidation since the end of April is on track to be a proper foundation in another week. This consolidation could be seen as a management on a deep basis dating back to March 2021.

Ashland shares rose 4% to 105.76, breaking a downtrend on a flat basis and widening a rebound from the 50-day line. The flat base, which could be considered part of a consolidation dating back to November, has a buying point of 111.15. The RS line is the highest in almost three years.

WRB shares rose 1.6% to 70.11, eliminating short-term resistance just above 69, providing early entry for the insurer. WR Berkley shares are flat on a flat basis with a buying point of 71.63, according to MarketSmith analysis. The RS line for WRB shares is at maximum.

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Market concentration analysis

The rise in the stock market led to a strong advance on Thursday, with significant gains in all major indices.

In particular, the volume of the Nasdaq rose slightly from Wednesday. The volume of the NYSE fell modestly.

The Dow Jones and S&P 500 moved above their 21-day moving averages, along with the Russell 2000. The Nasdaq is not there at all, but it cleared its 10-day line and moved above ‘a short-term rank.

After the 21-day line, the major indices face resistance on the 50-day and 200-day lines. A trend of power is still a long way off. The current market boom could disappear much sooner.

The market showed strong amplitude on Thursday. Because megacaps are not in a position to lead right now, a sustained rebound in the market will need a major breakthrough.

Retailers had a strong session and were a big driver of Thursday’s market gains. But most are still badly damaged and need a lot of repair. The only possible exception is the DLTR stock. Dollar Tree was up 22%, returning above its 50-day line and a trend line, recovering all of its losses from last week’s impressive Target Warning (TGT). However, the action of the elastic rope chart over the past week is not normal.

Energy stocks had a strong session with the sector still as a clear area of market strength. Drug makers seem solid, while lithium games like ALB stocks are at stake.

Travel works like DAL actions are starting to look interesting, but they have been prone to turbulence. Some steel plays are recovering.

While low-growth stocks were one of the big winners on Thursday, they remain highly risky. If the market withdraws, they will be among the big losers.

Time to market with IBD’s ETF market strategy

What to do now

Investors could tip the market, either through individual stocks or a broad market ETF. While some individual names blink at buy signals, many are in the energy space. But you don’t want to be too exposed to any sector, even energy.

If this market rally has legs, you can steadily increase your exposure as more names give way to buy signals. If this is another short-term breakthrough, you’ll want to get out quickly.

Shape your watchlists. Look for actions that are ready, or almost ready. But also keep track of quality names that are starting to take shape.

Read The Big Picture every day to keep up with market leadership and leading stocks and sectors.

Please follow Ed Carson on Twitter at @IBD_ECarson for stock updates and more.