Dow Jones futures rose modestly Thursday night, along with S&P 500 futures and Nasdaq futures. The stock market rally had a strong session Thursday, as the Nasdaq continues to build momentum with growth plays joining the tech megacaps. Taiwan Semiconductor (TSM) will be in focus Friday.
The split market rally is over, with the Nasdaq racing to record highs and more and more tech stocks breaking out, offering early entries or making other bullish moves.
Apple stock is building the right side of its base, along with Amazon.com (AMZN), Adobe (ADBE) and Nvidia stock. Shopify (SHOP) is flashing an early entry. Meanwhile, Microsoft (MSFT), Facebook (FB) and Google parent Alphabet (GOOGL) are at record highs, in buy zones.
IBD 50 stocks Etsy (ETSY), Square (SQ), Pinterest (PINS), Wayfair (W) and HubSpot (HUBS) are setting up in bullish bases. Etsy stock and Square are offering early entries while PINS and HUBS already did.
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Taiwan Semiconductor Sales Due
Taiwan Semiconductor will likely report March sales Friday morning, with quarterly earnings next week. The world’s largest chip foundry will provide clues about demand for its customers, including including Apple (AAPL) and Nvidia (NVDA).
TSM stock rose 2.95% to 123.43 on Thursday, closing just below its 50-day line. A move above the 50-day, and last week’s high of 127.40, could offer an early entry as TSM stock builds the right side of a base with a 142.29 buy point.
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Tech Giants Lead
Apple stock rallied 1.9% to 130.36, a day after retaking its 50-day line. Arguably that offered an early entry, though AAPL stock’s weak relative strength line didn’t give a strong reason for aggressive buying. Nvidia rose 1.2%, working on the right side of its base after moving sideways for several months.
Microsoft stock climbed 1.3%. Google stock advanced 0.5% while Facebook fell 7 cents. Those three titans are up 4.5%, 5.6% and 4.8%, respectively, so far this week.
Amazon stock edged up 0.6% on Thursday, moving toward an early entry. Adobe stock advanced 1.3%, hitting resistance near an early entry of 506.61. SHOP stock popped 5.45% to 1,222.69, reclaiming its 50-day line after rebounding from its 21-day line.
One potential weakness is that some of these rebounding techs, including Apple and Amazon stock, have been rising on light volume.
Square stock, Nvidia, Microsoft and Taiwan Semi are on IBD Leaderboard. Shopify stock is on SwingTrader. MSFT stock and Adobe are on the IBD Long-Term Leaders list. In addition to the five cited above, GOOGL stock also is on that elite IBD 50.
Dow Jones Futures Today
Dow Jones futures rose 0.2% vs. fair value. S&P 500 futures advanced 0.3% and Nasdaq 100 futures climbed 0.65%.
Remember that overnight action in Dow futures and elsewhere doesn’t necessarily translate into actual trading in the next regular stock market session.
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Coronavirus cases worldwide reached 134.50 million. Covid-19 deaths topped 2.91 million.
Coronavirus cases in the U.S. have hit 31.71 million, with deaths above 573,000.
Stock Market Rally Thursday
The stock market rally fared well, with the major indexes closing at session highs. Fed chief Jerome Powell spoke before the IMF on Thursday, once again reiterating his desire for extended sharp job growth and a short-term pickup in inflation.
The Dow Jones Industrial Average climbed 0.2% in Thursday’s stock market trading. The S&P 500 index rose 0.2%. The Nasdaq composite jumped 1%. The Russell 2000 advanced 0.85%, reclaiming its 50-day line.
The 10-year Treasury yield fell 2 basis points to 1.63%, the lowest since March 25.
Economic reopening and recovery plays retreated, including steel, energy, travel and industrial stocks, but many pared early losses.
Among the best ETFs, the Innovator IBD 50 ETF (FFTY) rebounded 1.3%, while the Innovator IBD Breakout Opportunities ETF (BOUT) rallied 1.9%. The iShares Expanded Tech-Software Sector ETF (IGV) climbed 1.85%, moving above its 50-day line. The VanEck Vectors Semiconductor ETF (SMH) gained 1.4%, just below record highs. TSM stock is the top SMH holding with Nvidia a key component.
SPDR S&P Metals & Mining ETF (XME) dipped 0.2% and Global X U.S. Infrastructure Development ETF (PAVE) was flat. U.S. Global Jets ETF (JETS) edged down 0.3%. All three ETFs closed well off morning lows.
Reflecting more-speculative story stocks, ARK Innovation ETF (ARKK) leapt 2.75%, with SQ stock a key holding. ARK Genomics ETF (ARKG) climbed 1.1%.
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Square stock popped 5.4% to 258.37, clearing a short-term high of 252.60. That’s another early entry after retaking the 50-day line and breaking a downtrend on Wednesday. SQ stock has an official buy point of 283.29.
Etsy stock ran up 5.6% to 215.39, the S&P 500’s top performer on Thursday. It reclaimed its 50-day average and broke a downtrend, two reasons to start a position. The arts and crafts e-commerce leader also has 231.44 as another potential early entry. Etsy stock’s official buy point is 251.96.
Pinterest stock climbed 2.5% to 85.98. It’s getting close to a 90 buy point. PINS stock offered an early entry when it broke a downtrend last week and passed its 50-day.
Wayfair stock climbed 1.9% to 332.22. It has a 356.06 handle buy point.
HubSpot stock leapt 6% to 514.18. HUBS stock has a 547.57 buy point after crossing its 50-day line and a trend line last week.
Market Rally Analysis
The stock market rally had a positive session, with growth stocks taking the lead.
The S&P 500 is at a record high, the Dow Jones is hovering just below Monday’s all-time peak while the Nasdaq is racing to join them. The Russell 2000 is now the laggard, but working on a handle around the 50-day line not far from record highs isn’t that bad either.
The split market rally, with the Nasdaq and growth stocks in a de facto correction, appears to be over. Chip stocks led the tech revival, followed by Microsoft, Facebook and Google on Monday. Now software, medtech plays and other growth sectors are coming on.
More stocks are setting up and flashing early entries, especially from growth sectors that had struggled for several weeks.
But a lot of big 2020 stocks are still well below their 50-day lines, including Tesla (TSLA), Teladoc Health (TDOC) and Zoom Video (ZM). Perhaps they will bounce back. Don’t assume a prior big winner will bounce back.
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What To Do Now
The February and late March sell-offs in big tech winners may have discouraged some investors. But in the past couple of weeks the stock market rally has clearly improved, offering a large number of breakouts.
It’s an important lesson for investors. When the market is choppy or in a correction, investors should reduce exposure or go to cash. But they should stay engaged. Pay attention to the market action and build up watchlists. That way you’ll be ready as a new market rally takes hold.
Investors should be taking advantage of this market rally, adding to exposure in recent weeks while avoiding being overweight in a particular stock, sector or theme. While reopening and recovery plays generally lagged Thursday, many still have solid charts.
Please follow Ed Carson on Twitter at @IBD_ECarson for stock market updates and more.
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