Dow Jones futures fell slightly overnight, along with S&P 500 and Nasdaq futures. JPMorgan Chase headlines its big earnings on Friday.
X
The tech growth plays led another strong session for the stock market rally as Treasury yields and the dollar continued to decline.
ParentGoogle Alphabet (GOOGL), ASML (ASML), Snowflake (SNOW), Arista Networks (ANET) and On hold (ONON) issued buy signals on Thursday as many other leaders extended their gains.
It’s been a good week for investors to add exposure, but the risk of another market pullback is growing.
Earnings
Aehr test systems (AEHR) reported fiscal fourth quarter revenue that slightly topped views, with revenue just beating. The chip test equipment maker, with exposure to EV semiconductors, sees fiscal 2024 revenue rise more than 50%, but perhaps just below views. AEHR stock soared 4% in volatile trading overnight. Shares rose 3.7% to 141.43 on Thursday, extending a rebound from the 10-week line and back above a previous buy point of 40.69 that is no longer valid. The AEHR stock has been consolidating for the past few weeks next to the top of a previous base.
JPMorgan Chase (JMP), Wells Fargo (WFC), Citigroup (VS), black rock (BLK) and UnitedHealth (UNH) tune in early Friday. JPM stock is in a buy zone while BLK stock is arguably actionable. Shares of UNH and other health insurers have been reeling in recent weeks.
Magnificent seven in a nutshell
Meanwhile, the Nasdaq is expected to announce on Friday how it will reweight the Nasdaq 100 via a “special rebalancing” that will take place on July 24. The “Magnificent Seven” Apple (AAPL), Microsoft (MSFT), Nvidia (NVDA), Google stock, Amazon.co.uk (AMZN), You’re here (TSLA) and Metaplatforms (META) should see lower weights.
On Holding, Nvidia and Tesla shares are in the ranking. ONON and Arista Networks stocks are on SwingTrader. On Holding and ANET are also on the IBD 50. TSLA stock is on the IBD Big Cap 20. On Holding was the IBD stock of the day on Thursday.
Dow Jones Futures Today
Dow Jones futures fell 0.2% from fair value. S&P 500 futures lost 0.2%. Nasdaq 100 futures were down 0.1%.
The 10-year Treasury yield rose 2 basis points to 3.78%.
Remember that overnight action on futures contracts on Dow Jones and elsewhere does not necessarily translate into actual trading in the next regular trading session.
Join the experts at IBD as they analyze actionable stocks in the stock market rally on IBD Live
Stock market rally
The stock market rally saw major indexes rise for a fourth consecutive session.
The Dow Jones Industrial Average rose just 0.1% in Thursday’s trading, hovering around 2023 highs. The S&P 500 index climbed 0.85% to a new 14-month high. The Nasdaq composite jumped 1.6%, passing the 14,000 level to its best level in 15 months. The small-cap Russell 2000 rose 0.9%.
The Invesco S&P 500 Equal Weight (RSP) ETF rose 0.5% to its best level in nearly five months.
The First Trust Nasdaq 100 Equal Weighted Index ETF (QQEW) jumped 1.1%. QQEW lagged the Nasdaq 100 somewhat on Thursday, but has outperformed so far this week.
Market breadth is strong, with NYSE progressives outpacing decliners by at least 2 to 1 for the fifth consecutive session.
Major stocks continued to perform well. Several other stocks issued buy signals while many others continued to run.
U.S. crude oil prices rose 1.5% to $76.89 a barrel, up 5.3% in three sessions. Copper futures jumped 2.3%, extending a recent rebound.
The 10-year Treasury yield fell 10 basis points to 3.76%. It was down 29 basis points this week on subdued inflation reports, reversing lower from a 2023 high of 4.09%. The US dollar slipped for a sixth consecutive session.
Market rally too fast, too furious?
The only real concern for the stock market rally is that the Nasdaq is now 8% above its 50-day line, with the Nasdaq 100 8.4% above that level. Historically, the odds of a pullback increase as these indexes rise above 5% to 6% in the 50 days, but in recent years the Nasdaq has occasionally exceeded 10% before pulling back.
But a pullback towards, say, the 21-day line would be normal action for a bull market. It would also allow some expanded stocks to create new entries.
A pullback could also dampen signs of speculative frenzy. Bitcoin surged on Thursday while many other cryptocurrencies and crypto stocks rose as a federal judge ruled that Ripple’s XRP token is not necessarily a security.
Nicholas (NKLA) jumped 61% on Thursday on a deal to sell 50 big hydrogen fuel cell platforms.
AND F
Among growth ETFs, the Innovator IBD 50 ETF (FFTY) rose 1.5%. The iShares Expanded Tech-Software Sector ETF (IGV) gained 1.65%. The Microsoft stock is a major component of the IGV. The VanEck Vectors Semiconductor (SMH) ETF rose 2.4%. Nvidia stock is SMH’s largest holding, with ASML also a notable member.
Reflecting more speculative stocks, ARK Innovation ETF (ARKK) climbed 4.5% and ARK Genomics ETF (ARKG) gained 0.9%. Tesla stock is the largest holding among Ark Invest’s ETFs.
The SPDR S&P Metals & Mining ETF (XME) rose 0.9%. The US Global Jets ETF (JETS) fell 0.95%. The SPDR S&P Homebuilders ETF (XHB) edged up 0.35%. The Energy Select SPDR ETF (XLE) fell 0.4% and the Health Care Select Sector SPDR Fund (XLV) rose slightly. UNH stock is one of the main UNH components.
The Industrial Select Sector SPDR fund (XLI) edged up 0.1% and the Financial Select SPDR ETF (XLF) edged up 0.3%. JPM, Wells Fargo, BlackRock and Citigroup stocks are big XLF holdings.
Five best Chinese stocks to watch now
Stocks to Watch
Google stock jumped 4.7% to 124.54, decisively retracing its 50-day line and breaking a trendline in heavy volume. Google is launching its Bard chatbot in Europe and Brazil. GOOGL stock has a flat-based buy point of 129.04.
SNOW stock rose 7.15% to 184.22, bouncing off the 50-day line in heavy trading, offering early entry, especially in the morning. Snowflake stock has encountered a lot of resistance around the 185-193 level, with big swings over the past few weeks. Investors might view 193.94 as a messy buy point in a base dating back to last August, but calmer action would help.
ASML stock rose 3.6% to 750.74, continuing to rebound from the 50-day line and above 747.13 points from a flat = base, base-to-base pattern. Stocks are already exploitable by giving off a not-so-steep trendline. ASML revenue is expected on July 19.
ANET stock climbed 2.8% to 168.61, extending this week’s rally off the 21-day/10-week lines and breaking a trendline in a consolidation. On Thursday, stocks hit a short-term high. Volume was below average but is picking up from previous days. The base had lousy action in June, but has improved. The official buy point is 178.36.
ONON stock rose 3% to 33.55, above a trendline entry but just below a 33.67 cup handle buy point, according to MarketSmith analysis . Shares of the Swiss high-end sports shoe maker hit 34.48 during the day.
Nasdaq 100 Rebalancing
The Nasdaq will announce its special rebalancing changes on Friday, likely after the market closes. The rebalancing is taking place as Apple, Microsoft, Google, Amazon, Nvidia, Tesla and Meta stocks make up more than half the weight of the Nasdaq 100. So those names are likely to drop, with MSFT and Nvidia stocks enjoying seeing declines excessive.
The other 93 stocks in the Nasdaq 100 will also see their weight rise or fall.
Starbucks (SBUX), Mondelez International (MDLZ), Reserve credits (BKNG), Gilead Sciences (BROWN), Intuitive surgery (ISRG), Analog devices (ADI) and Automatic data processing (ADP) will be the winners of the special rebalancing, Wells Fargo analysts calculated on Tuesday.
The actual rebalancing will take place before the July 24 open. But the news will probably be integrated before this date, if not already.
Most Magnificent Seven shares fell on Monday, following the announcement of the special rebalancing. But they have collectively rebounded, with shares of Nvidia and Meta soaring, Google and Amazon rising solidly, and modest gains for Microsoft and Tesla. Apple stock is mostly flat, near all-time highs.
All stocks except Apple and META offered buying opportunities this week.
Time the Market with IBD’s ETF Market Strategy
What to do now
The market rally sent bullish signals through major indices and stocks. Investors should take advantage of this climate by adding to existing positions or making new purchases. Do it gradually, especially now that the Nasdaq is extended again and earnings season resumes.
You can cut some relative laggards or take partial profits from winners to free up money to load on stocks with more potential.
A pullback in the market could put pressure on further buying, although longer-term winners could do well.
Build and browse these watchlists. The past few days of trading have been fun, but putting in the work of running screens, setting alerts, and other efforts is what makes investing pay off.
Read The Big Picture every day to stay in tune with market direction and top stocks and sectors.
Please follow Ed Carson on Twitter at @IBD_ECarson for stock market updates and more.
YOU MIGHT ALSO LIKE:
Why This IBD Tool Simplifies Finding Best Stocks
Best Growth Stocks to Buy and Watch
IBD Digital: Unlock IBD’s premium stock listings, tools and analysis today
Tesla vs. BYD: The EV giants are vying for the crown, but what’s the best buy?